According to notes included in an investor presentation, the beleaguered Adani group is planning to achieve a pre-tax profit increase of 20% year-on-year in order to attain EBITDA of Rs 90,000 crore in the next two to three years. Strong expansion in businesses ranging from airports to energy would be the driving force behind this growth.
In an effort to regain the confidence of investors after the publication of a damaging report by a US short seller, the company returned debts totaling USD 2.65 billion earlier this month. This action brought a prepayment plan designed to reduce overall leverage to its conclusion.
The ports-to-energy conglomerate is now looking at robust growth in sectors such as airports, cement, renewables, solar panels, transportation and logistics, and power and transmission, it said, adding that several of Adani’s new infrastructure investments will also begin to fructify and generate cash in the coming years. Adani is a multinational company that operates in a variety of industries, ranging from ports to energy.
As a result of Adani’s efforts to foster strong and long-term expansion throughout its entire business portfolio, it is anticipated that the company’s consolidated EBITDA will rise by more than twenty percent over the course of the next several years. According to the memo, the company anticipates reaching its goal EBITDA of more than 90,000 crore by the end of FY23.
Over the course of the last several years, the company has made considerable investments in port infrastructure and successfully completed key projects in the areas of renewable energy, transportation, and port infrastructure.
Companies in a variety of industries, including airports and renewables, are reporting increased cash flows. Its robust asset base, which has been built up over the course of three decades, provides support for highly available vital infrastructure and guarantees outstanding asset performance throughout the life cycles of those assets.
EBITDA from the group’s listed portfolio reached Rs 57,219 crore in FY23 (the fiscal year running from April 2022 to March 2023). This is a year-over-year growth of 36%. Core infrastructure companies, which form 82.8 percent of the portfolio and include energy, transport, logistics, and flagship Adani Enterprise Ltd.’s infrastructure projects, reported a healthy 23 percent year-over-year increase in EBITDA to reach Rs 47,386 crore. Core infrastructure businesses also contributed to the growth of the portfolio overall.
The existing businesses of AEL also had a remarkable result, growing by 59% year-over-year to a total of Rs 5,466 crore in revenue. Ten percent of AEL’s total holdings are made up of the company’s current operations.
The Adani Group’s portfolio works in the utility and infrastructure sectors, delivering secure and steady cash flows. Approximately 83 percent of its EBITDA is produced by core infrastructure companies. The company is targeting expansion across a wide range of industries, including airports, cement, renewable energy, solar panel manufacturing, ports, power transmission, and the transmission of electrical power.
The previous year was a moment of considerable development for Adani, as the company’s portfolio saw strong growth of 36%, which was concurrently complimented by an efficient deleveraging plan, as can be seen by the company’s improved net debt to EBITDA ratio. This led to a period of substantial advancement.
When compared to the portfolio as a whole, the total net debt to EBITDA ratio decreased from 3.8 times in FY22 to 3.27 times in FY23. According to the note, the ratio of the group’s net debt to its run-rate EBITDA decreased to 2.8 times in FY22 from 3.2 times in FY23, which demonstrates the group’s good financial discipline in the midst of the robust expansion.
The management of the Adani Group has confirmed that there is not a large debt maturity on the horizon in the near future. This indicates that there is not a material refinancing risk or a necessity for near-term liquidity.
The value of the net assets relative to the total assets comes to 3,911 billion rupees. The company has, throughout the course of time, increased the diversity of its long-term debt portfolio, decreased its dependence on banks, and broadened the sources from which it obtains finance. Bonds account for 39% of the current debt, followed by global international banks with 29%, public and private banks, and NBFCs with 32% each.
The exposure of the company is still less than one percent of the overall bank exposures in India, and top Indian banks such as SBI and other PSUs have indicated their contentment with the ratio of the firm’s debt and equity to its EBITDA, which is 3.2 percent.
The group’s dollar debt is also properly hedged, and the recent increases in interest rates by the European Central Bank are likely to have a small effect on debt costs and service since the majority of ECBs are at a fixed rate, according to the note.
Adani Group has fully repaid both the USD 2.15 billion in loans obtained by pledging shares in the conglomerate’s listed enterprises and the USD 700 million in loans taken for the purchase of Ambuja Cement.
In addition, the letter mentions that the promoters have successfully concluded the sale of shares in four different listed group firms to GQG Partners, a major global investment company, for a total of USD 1.87 billion (Rs 15,446 crore).
Adani Connex, the company’s datacenter division, has just secured the biggest datacenter project financing in India, with USD 213 million secured from six foreign banks (SMBC, MUFG, Mizuho, ING, Natixis, and SCB). This makes Adani Connex the market leader in India’s datacenter industry.
This demonstrates the trust that the financing lenders have in Adani Portfolio and the companies it owns.
The US short-seller Hindenburg Research published a damaging study in January claiming accounting fraud and stock price manipulation at Adani Group. This revelation triggered a stock market meltdown that wiped out almost USD 145 billion from the conglomerate’s market value at its lowest point. Hindenburg Research is based in the United States.
Adani Group has completely refuted Hindenburg’s allegations, and the business is already planning a response campaign. In order to ease the concerns of the investors, the firm has rethought its goals and paid off part of its debt.
Cash Balance and FFO (together at Rs 77,889 crore) are much larger than the debt maturity cover for FY24, FY25, and FY26 at the combined portfolio level, which is 11,796 crore, Rs 32,373 crore, and Rs 16,614 crore, respectively.
