29 February 2024

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Adani Group

Adani Group aims for a 90,000-crore EBITDA in two-three years

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According to a corporate observe, the embattled Adani Group is targeting a 20% year-on-year increase in pre-tax earnings to exceed 90,000 crore EBITDA in 2-3 years on the strength of solid expansion in industries ranging from airports to energy.

Earlier this month, the business returned $2.65 billion in loans to complete a prepayment scheme to reduce total debt in a bid to regain investor faith following a stinging report by a US short seller.

The ports-to-energy conglomerate is now expecting robust growth in sectors such as airports, cement, renewables, solar panels, transportation and logistics, and power and transmission, according to the company, adding that several of Adani’s new infrastructure investments will also begin to fructify and generate cash in the coming years.

Adani Group expects to raise EBITDA on a consolidated basis by more than 20% in the next years as it pursues robust and sustainable development across its business range. The company’s projected EBITDA of more over 90,000 crore is expected by FY23, according to the memo.

In recent years, the company has made large investments in ports and accomplished major projects in renewables, transportation, and ports. Airports and renewable energy companies are also reporting stronger cash flows. Its stable asset base has been created over three decades and supports resilient vital infrastructure while ensuring excellent asset performance throughout their life cycles.

Adani Group

In FY23 (April 2022 to March 2023 fiscal), the group’s listed portfolio EBITDA climbed 36% year on year to 57,219 crore. Core infrastructure companies, which account for 82.8 percent of the portfolio and include energy, transport, logistics, and the flagship Adani Enterprise Ltd’s infrastructure initiatives, increased EBITDA by 23% year on year to 47,386 crore.

AEL’s current companies also performed well, increasing by 59% year on year to 5,466 crore. AEL’s current operations account for 10% of its portfolio.

The Adani Group’s portfolio works in the utility and infrastructure sectors, delivering secure and steady cash flows, with core infrastructure companies accounting for around 83% of its EBITDA. The company has set its eyes on expansion in a variety of industries, including airports, cement, renewables, solar panels, ports, power, and transmission.

Adani made considerable success last year, as its portfolio’s rapid expansion of 36% was complimented by an efficient deleveraging plan, as seen by its improved net debt to EBITDA ratio.

In FY23, the portfolio’s overall net debt to EBITDA ratio improved to 3.27 times from 3.8 times in FY22. The net debt to run-rate EBITDA ratio improved to 2.8 times in FY22 from 3.2 times in FY23, highlighting the group’s outstanding financial discipline despite robust expansion, according to the report.

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Adani Group Confirmation

The Adani Group’s management confirms that no substantial debt maturity is approaching in the near term, indicating no material refinancing risk or short-term liquidity demand.

Gross assets have a net asset value of 3,91,000 crore. Over time, the company has diversified its long-term debt portfolio, decreased its reliance on banks, and expanded its funding sources. The current debt is distributed among bonds (39 per cent), global international banks (29 per cent), PSU and private banks and NBFC (32 per cent).

The group’s exposure remains less than 1% of overall bank exposures in India, and top Indian banks, including SBI and other PSUs, have expressed satisfaction with the group’s debt/equity to EBITDA ratio of 3.2%.

The group’s dollar debt is also properly hedged, and recent ECB interest rate rises are projected to have little impact on debt costs and service because most ECBs are fixed rate, according to the letter.

Adani Group has fully repaid $2.15 billion in loans obtained by pledging shares in the conglomerate’s listed companies, as well as $700 million in loans obtained for the acquisition of Ambuja Cement.

The promoters also concluded the sale of shares in four listed group firms to GQG Partners, a major global investment company, for $1.87 billion (15,446 crore), according to the notice.

Hindenburg Research, a US short-seller, produced a devastating report in January claiming accounting fraud and stock price manipulation at Adani Group, sparking a stock market collapse that wiped roughly $145 billion from the conglomerate’s market worth at its lowest point.

Adani Group has disputed all of Hindenburg’s charges and is planning a response strategy. To appease investors, the organisation has redefined its aspirations and prepaid some loans.

At the combined portfolio level, Cash Balance and FFO (together at 77,889 crore) are much greater than debt maturity cover for FY24, FY25, and FY26 of 11,796 crore, 32,373 crore, and 16,614 crore, respectively.