Adani Group plans Rs 40K cr fundraise from retail, HNI investors via NCDs

Adani group's recent corporate filings show that as of March 31, 2024, domestic lenders had an exposure of Rs 88,100 crore to various Adani Group entities through long-term and working capital loans

The Adani Group intends to raise between Rs 30,000 and Rs 40,000 crore from retail investors over the next three to four years in a bid to broaden its funding sources and mitigate risk, according to a MoneyControl report citing sources.

On Wednesday, the group's flagship entity, Adani Enterprises Ltd, launched its first public offering of secured non-convertible debentures (NCDs) valued at Rs 400 crore. These NCDs, which have maturities ranging from two to five years, offered an annual yield of between 9.25 per cent and 9.90 per cent and were fully subscribed on the first day.

"The group plans to introduce similar public issues (NCDs) for its other entities. This approach will help decrease the group’s reliance on rupee loans from a limited number of lenders, which currently include public and private sector banks," a person aware of the proposed development told MoneyControl.

 

The group’s most recent corporate filings show that as of March 31, 2024, domestic lenders had an exposure of Rs 88,100 crore to various Adani Group entities through long-term and working capital loans.

Adani Enterprises: Debt and liquidity overview

Adani Enterprises, which serves as a hub for many of the group’s new ventures, experienced a rise in its debt during the financial year 2023-24 (FY24). According to the company’s latest investor presentation, long-term borrowings increased from Rs 32,590 crore in FY23 to Rs 43,718 crore in FY24, while short-term borrowings rose from Rs 4,244 crore to Rs 4,897 crore. Meanwhile, the company's total debt increased from Rs 38,320 crore in FY23 to Rs 50,124 crore in FY24.

Concurrently, the company’s cash and cash equivalents, which include cash, bank balances, and current investments, improved from Rs 5,539 crore to Rs 8,523 crore. The Adani Group has, so far, not issued any statement regarding the group’s fundraising plans.

However, an anonymous source told MoneyControl, “Raising funds from retail investors is beneficial for diversification and will enhance overall goodwill and public recognition of the group. This may also positively impact the group’s equity base by attracting more retail investors.” Traditionally, the group has accessed foreign debt markets for capital while obtaining rupee loans from domestic banks.

Adani Enterprises: Positive financial outlook

Recent investor presentations by the group highlighted its strong liquidity position, stating it has sufficient cash reserves to cover over 30 months of debt repayments. By the end of June, the group’s cash balance represented 24.8 per cent of its gross debt of Rs 2.41 trillion, up from 17.7 per cent the previous year. “24.77 per cent of gross debt is covered by cash balances, providing liquidity for 30 months of debt servicing,” the group stated.

The conglomerate also reported a 33 per cent increase in pre-tax profit for the June quarter, driven by strong performance in its core infrastructure businesses and growth in emerging sectors such as solar and wind manufacturing, as well as airports.

ICRA, the rating agency, predicts that incremental credit flow from domestic sources in the Indian economy will moderate to Rs 24.5 trillion in FY25 compared to the previous year. However, bond issuances are expected to rise as the domestic debt capital market remains an appealing source of borrowing for large corporations.