Adani Group improves credit profile with enhanced liquidity

The Adani Group has reached a significant milestone through a series of moves, enhancing its liquidity position. The conglomerate's portfolio now holds a cash balance of Rs 42,115 crore. Several key measures have contributed to this shift. Notably, the deployment of equity has played a pivotal role, elevating the total equity to 55.77 per cent of the total assets, a substantial rise from 40.16 per cent recorded at the close of FY19. This equity deployment reached nearly Rs 2.36 crore by the conclusion of FY23, surpassing the net debt of Rs 1.87 crore.

Amidst this growth, EBITDA and gross assets have surged significantly over the last four years, with CAGRs of 18.13 per cent and 21.7 per cent respectively (FY19 to FY23). In the June FY24 quarter, EBITDA saw a remarkable 42 per cent year-on-year increase, accounting for over 40 per cent of the entire FY23. Importantly, this growth has outpaced net debt, which has grown at a CAGR of 14.56 per cent, leading to improved leverage ratios.

Net debt to run-rate EBITDA improves

Leverage ratios have experienced a positive shift, with the net debt to run-rate EBITDA for FY23 improving to 2.8x from 3.2x in the previous year. The Gross Assets to Net Debt ratio stood at 2.3x by the end of FY23, while the Net Debt to Equity ratio reached 0.8x. Moreover, the Debt Coverage ratio improved to 2.02x for FY23, up from 1.47x in FY22.

A significant portion of the portfolio's EBITDA is derived from businesses with ratings equivalent to India's sovereign rating, adding stability. 

The core infrastructure and utility platforms accounted for 83 per cent of total EBITDA in FY23 and 86 per cent in the June FY24 quarter. Contractual businesses also contributed significantly, accounting for 82 per cent of the portfolio's EBITDA in FY23.

Diverse funding strategies

Diverse funding strategies have mitigated concentration risk, as finance sourcing spans global and domestic banks, capital markets, and other avenues. This conservative approach has led to a robust maturity cover for debt, reducing refinancing risks. The success of a 10-year equity programme initiated in 2016 stands out, attracting over $9.5 billion (Rs 78,446.73 crore) from global investors since 2019. This programme supported strategic priorities and contributed to pre-payment of margin-linked share-backed financing.

Additionally, through market transactions, the promoter-level entity has generated Rs 30,900 crore since March 2023, further enhancing financial strength.

These achievements underline the Adani Group's commitment to financial strength and stability, positioning it for continued growth across diverse sectors.