Allaying concerns of debt-funded growth, Gautam Adani-led Adani Group has said the debt levels of the group are well within the industry standards and that it is being monitored for deleveraging at regular intervals.
Adani Group has said that its group companies have consistently de-levered with portfolio net debt to EBITDA ratio coming down from 7.6x to 3.2x — EBITDA has grown 22 per cent CAGR in the last 9 years and debt has only grown by 11 per cent CAGR during the same period. This has also resulted in the deleveraging of the promoter-level debt and promoter pledges shares have reduced between 2020 and 2022.
CreditSights, a Fitch Group unit, had recently said it remains “cautiously watchful” of the debt-funded expansion of Adani Group, particularly that of the listed entities. Over the past few years, the Adani Group has pursued an aggressive expansion plan that has pressurised its credit metrics and cash flows, the credit research agency said in its report titled, ‘Adani Group: Deeply Overleveraged’.
Reacting to the a report by CreditSights, Adani Group said it operated in four broad verticals and they are highly integrated.
Further, it said all businesses, which require shareholder support, are housed under the incubator arm – Adani Enterprises. These businesses continue under AEL till the time the business is self-sustaining, after which they are listed separately, creating value for AEL’s shareholders.
All listed businesses operate on a strict “no financial accommodation” policy and have independent boards and management. The businesses operate on a simple yet robust and repeatable business model focussed on development and origination, operations and management and capital management plan.
In the case of AEL, the gross leverage is well within the stated credit thresholds of six times. Of the gross debt of ₹28,500 crore, ₹20,000 crore is towards the trading business, which is fully backed by the regular business receivables. Excluding the working capital debt for trading business, the real Gross leverage for AEL is less than two times.
Additionally, AEL has received primary equity infusion of $1 billion from IHC in May, which fully funds equity requirement for all incubating businesses, except for Adani New Industries. ANIL is a 75:25 joint venture with TotalEnergies.
Adani Portfolio has raised $16 billion equity under a systematic capital management plan for all portfolio companies over the last three years as a combination of primary, secondary and committed equity from marquee investors such TotalEnergies, Abu Dhabi-based International Holding Company, Qatar Investment Authority and Warburg Pincus.
Over the past three years, the portfolio has raised $32.3 billion capital, which is split into $8.3 billion in debt capital market issuances, $8 billion in GoTo market facilities and $16 billion in Equity Capital programme, which is the largest programme by any group in India, it said.