Expect stable cash flows and earnings in FY24, Adani tells banks

Gross debt at Rs 2.27 trillion in FY23 after repayment

Adani Group is expected to report a 20 per cent rise in its earnings before interest, tax, depreciation, and amortisation (Ebitda) at Rs 61,200 crore for the year that ended in March 2023 (2022-23, or FY23), according to a note submitted by the group to lenders recently.

The group had earned Ebitda of Rs 57,299 crore in the preceding financial year that ended in March 2022 (2021-22).

The group’s gross debt was Rs 2.27 trillion as of March 31, 2023, and has projected to not take on additional debt until it lowers its existing one.

Net debt for 2022-FY23 was projected at Rs 1.95 trillion after it repaid debt worth Rs 23,590 crore the same year, according to a recent note submitted to lenders and regulators on future projections.

Adani Ports, a group company, will buy back bonds worth upto $300 million from its investors by using its own cash in the ongoing financial year. 

When contacted, a senior company executive said there was no material refinancing risk and/or near-term liquidity requirement since there was no short-range significant debt maturity outside of the credit envelope.

“International and domestic rating agencies have affirmed ratings across the portfolio, signifying high-quality underlying credit quality,” confirmed the executive.

Adani Group shares came under bear attack on January 23 this calendar after a New York-based short-seller Hindenburg Research in its report accused the group of engaging in “brazen stock manipulation and accounting fraud schemes over the course of decades”.

The group denied the allegations, calling out the conflict of interest of Hindenburg since the short-seller had taken positions in the group’s debt listed overseas.

Since publication of the report, the group sold stake in four companies and prepaid debt worth $3 billion with the proceeds.

All the group stocks have since recovered by 47 per cent since the lows touched end-February.

In the presentation, the group said the value of total gross assets was Rs 3.91 trillion as of March 2023.

The group informed banks that it has consistently diversified its long-term debt portfolio and reduced exposure to banks by using other sources of capital.

As of March 31, 2023, the company’s debt exposure covered 39 per cent to bonds, 29 per cent to global international banks, and 32 per cent to Indian banks and home-grown non-banking financial companies.

At the meetings, the lenders reaffirmed their commitment to the group, saying they would continue to lend to companies backed by stable cash flow.

The group informed bondholders that its dollar-denominated debt was hedged, with an approximate average interest cost of about 5-6 per cent.

The recent rise in interest rates overseas has had minimal impact on debt cost and debt servicing seeing that most of the external commercial borrowing debt is of a fixed rate.

Adani Group’s foreign exchange policy embeds the entire exchange cost and provides 220 basis points of built-in buffer in the maturing facilities coming up for repayment over the next few years.

On its growth plans, the group said its portfolio companies have a track record of successfully executing marquee large-scale projects in infrastructure and utilities.

“While doing so, the companies have consistently delivered, with a strong cash flow generation profile, underpinned by a long-term contractual framework for the projects, as well as a robust asset base,” the note stated.

The growth in the years to come will be from core infrastructure business, cement, and flagship Adani Enterprises’ existing businesses and consumer products.

Adani portfolio companies operate in utilities and infrastructure, with more than 81 per cent of the Ebitda being generated from core infrastructure businesses providing assured cash flow generation.

Presentation insights
 

Ebitda projected at Rs 61,200 cr for FY23

Gross debt was Rs 2.27 trn as of March 31, 2023

Net debt for FY23 estimated to be Rs 1.95 trn after it repaid debt worth Rs 23,590 cr

Total gross assets were Rs 3.91 trn as of March 2023

Adani Ports to buy back bonds worth up to $300 mn

Informs banks it has diversified its long-term debt portfolio