The Adani group is increasingly turning towards domestic borrowing, especially from the Indian banks, as it looks to reduce high-cost overseas borrowings while a high credit rating makes it an acceptable risk to domestic lending institutions.
Domestic long-term debt (primarily from banks) as a percentage of the total rose to 36 per cent in FY24 at ₹75,877 crore, up from 29 per cent in FY23 at ₹59,250 crore. The group’s total debt rose to ₹2.4 lakh crore in FY23 from ₹2.27 lakh crore in FY22.
According to the group’s own information deck, some of the major State-owned lenders to the group are State Bank of India, REC, Bank of Baroda, Union Bank, and Canara Bank, while private lenders include ICICI Bank, HDFC Bank, and Axis Bank.
International banks still account for 26 per cent of total debt, but this is mostly due to the loans taken to finance the acquisition of Ambuja Cements and ACC in 2022.
“Indian banks have raised their lending exposure to the group in the past year,” said a market analyst.
A major reason for this is upgrades in credit ratings by global and domestic rating agencies, including the first ‘AAA’ rating given to Adani Ports by ICRA. There have been rating upgrades for other group firms also, such as Adani Power, Adani Energy solutions, Adani Green, and Adani Total Gas.
According to the group’s investor deck, cash reserves as a percentage of total borrowing are more than 20 per cent, and this is a key metric when assessing liquidity risk. At the end of the last fiscal year, it had enough cash balance to provide liquidity cover for more than 30 months of debt servicing. The group had a cash balance of ₹59,791 crore in FY24, up from ₹40,268 crore in FY23.
In FY24, funds from operations were at $6.2 billion, a 22 per cent conversion rate from revenue.
The Adani group has traditionally relied on overseas bonds but lately has been tapping the domestic bond and equity markets as well. Adani Enterprises recently launched an ₹800 crore NCD issue and is expected to raise around $2 billion through an institutional placement of equity shortly. Adani Energy Solutions recently raised around $1 billion through a QIP, which was subscribed to six times.
On Friday, the promoters sold a 2.8 per cent stake in Ambuja Cements to raise over ₹4,200 crore and more promoter stake sales are in the pipeline.