Adani Group firms' balance sheet improved in 2 years; debt rose: Bernstein

Debt burden primarily on Adani Enterprises; group's cash reserve has increased 75% since March 2023

The Adani Group in the last two years improved its net debt to earnings before interest, taxes, depreciation, and amortisation (ebitda) ratio and cash reserves as gross debt grew, according to global financial services firm Bernstein.

 

Net debt to ebitda ratio improved to 2.7 in September 2024 against 4.4 in March 2023, with improvements by Adani Green, Adani Transmission and Adani Power, “primarily due to a rise in ebitda as assets got operational across the group, fundraising and even profitability improved.”

 

The group in September 2024 had a cash reserve of Rs 39,000 crore, 75 per cent more against Rs 22,300 crore in March 2023.

 

 

Gross debt rose to Rs 279,300 crore in September 2024, after falling from Rs 241,000 crore in March 2023 to Rs 238,500 crore in September 2023 after US short-seller Hindenburg's critical report of the conglomerate earlier. The rise is primarily driven by Adani Enterprises, whose gross debt stood at Rs 804,00 crore in September 2024 against Rs 571,00 crore in September 2023.

 

The group has over the years has shifted away from banks to bonds. Since March 2023, however, the share of dollar bonds has decreased and that of Indian non-banking financial services (NBFCs) has increased in the source of funds. Bernstein said the reason behind the shift may be the favorable rates in Indian markets against dollar bonds.

 

The group has reduced relying on Indian banks and is raising money from bonds and international banks. The share of bank loans reduced from 86 per cent in financial year 2016 (FY16) to just 15 per cent in FY24, and the share of bonds increased from 14 per cent in FY16 to 31 per cent in FY24.

 

Earlier, in a credit update for the first half (H1) of FY25 (H1 FY25), the group said its existing cash balances provide liquidity cover for about 28 months of debt servicing.

 

The port-to-energy conglomerate said that its annual debt maturities for each year until 2033–34 are lower than its current operating cash flow as of September 2024, suggesting that it can meet its debt obligations through operational cash generation.

 

Adani Green reports a balanced repayment schedule amid enough cash reserves.

 

According to Bernstein, Adani Green Energy Limited’s debt repayment schedule is more balanced, except for a payment in H2 FY25 of Rs 9,600 crore, of which Rs 8,900  crore is due to a dollar revolving facility taken by the company. However, considering the fact that the company has a cash reserve of Rs 5,900 crore, “it seems lesser of a concern,” said a report by Bernstein.

 

Adani Green had a significant part of its debt up for repayment in FY25, including a $750 million holding company bond that had fallen sharply recently. Additionally, for the group, the next dollar bond matures in August 2026.