Billionaire Gautam Adani's conglomerate on Monday presented its financial and credit details to investors, emphasising strong profits and cash flows that it says can support growth without relying heavily on external debt.
The ports-to-energy conglomerate has faced recent scrutiny following an indictment in a US court against its founder-chairman Gautam Adani and two executives for allegedly bribing an Indian official to secure solar power contracts. Despite this, the group highlighted its expanding profits and cash flows, which it claims have reduced its dependence on debt for growth.
Equity now constitutes nearly two-thirds of Adani Group's total asset creation, a significant shift from five years ago. Over the past six months, the group has invested approximately ₹75,227 crore while increasing total debt by just ₹16,882 crore.
In a note shared with investors, the group outlined its liquidity position, stating: “Adani Portfolio companies have sufficient liquidity to cover all debt servicing requirements for at least 12 months.”
As of 30 September 2024, the companies held ₹53,024 crore in cash, equivalent to 21% of their total gross debt outstanding. This amount, the group said, is enough to meet debt servicing requirements for the next 28 months.
Growth without heavy debt
The group has announced plans to invest more than ₹8 lakh crore ($100 billion) across its portfolio companies over the next decade. Cash profits, or Fund Flows from Operations (FFO), reached ₹58,908 crore in the past 12 months and have grown at over 30% annually for the past five years.
Based on this trajectory, the group estimates it can invest ₹5.9 lakh crore solely from internal cash accruals over the next decade, significantly reducing its reliance on external debt.
The group’s debt gearing ratio stands at 2.46x, indicating substantial headroom for additional borrowing if needed.
The Adani Group’s presentation highlighted key financial metrics showcasing its robust performance. EBITDA (earnings before interest, tax, depreciation, and amortisation) for the last 12 months increased by 17% to ₹83,440 crore.
The group noted that its current annual cash flows are sufficient to pay off all existing debt within three years.
Gross assets and investments grew by ₹75,227 crore, significantly outpacing the total debt increase of ₹16,882 crore, bringing the total asset base to ₹5.5 lakh crore.
Additionally, the average borrowing cost dropped to 8.2%, the lowest in five years, supported by rating upgrades across its portfolio companies.
Adani Group’s long-term domestic bank debt totals ₹94,400 crore, against a cash balance of ₹53,024 crore, most of which is parked with Indian banks. Borrowings from global banks make up 27% of total debt.
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