Ports-to-power conglomerate Adani group on August 24 said that its various strategic initiatives have increased the company's total equity deployment to Rs 2.36 lakh crore, which is more than half of the group's total gross assets.
"Equity deployed by the end of FY23 was Rs 2,35,812 crore, much higher than the net debt of Rs 1,87,087 crore," a release issued by the Ahmedabad-headquartered business giant stated. This resulted in the total equity increasing to 55.77 percent of the total assets as compared to 40.16 percent at the end of FY19, it said.
Adani group also noted that it closed the June 2023 quarter with the "highest-ever cash balance at portfolio level of Rs 42,115 crore". This was Rs 1,764 crore higher than at the end of the preceding March quarter.
For the first time, the portfolio’s net debt to earnings before interest taxes, depreciation and ammortisation (EBITDA) fell below 3x — at 2.81x in the last 10 years, the release added.
"EBITDA and gross assets have grown at a much faster rate in the last four years (FY19 to FY23) at a CAGR of 18.13 percent and 21.7 percent, respectively," it said.
EBITDA in the June 2023 quarter increased by 42 percent on-year and was more than 40 percent of the entire FY23, Adani group said. As against these, net debt has grown at only 14.56 percent CAGR, "resulting in consistently improving leverages ratios", it added.
As per the details provided in the release, the net debt to run-rate EBITDA for FY23 fell to 2.8x as compared to 3.2x a year ago. At the end of the year ending March 2023, gross assets to net debt was 2.3x, and net debt to equity stood at 0.8x. The group's debt coverage ratio improved to 2.02x for the entire fiscal as compared to 1.47x for FY22.
"More than half of the portfolio EBITDA is from the businesses that enjoy ratings equal to sovereign rating of India. Such high ratings have allowed continues capital market access," Adani group said.
The core infrastructure and utility platform accounted for 83 percent of total EBITDA in FY23 and 86 percent in the June 2023 quarter, whereas, contractual businesses accounted for 82 percent of the portfolio EBITDA in FY23, it said, adding that "such a high contribution offers great stability and multi-decadal visibility on earnings".
According to the group, its diversified finance sourcing from global as well as domestic banks, capital markets and others has "eliminated concentration risk".
"The conservative planning has provided for a robust maturity cover. Maturity profile of debt for all the companies exceeds cover period in all cases, ensuring refinancing protection and eliminating systemic risks," the release added.
The group's free funds flow plus cash for FY23 was 2.72x against an average debt maturity cover of 6.55 years, "thus eliminating refinance risks", as per the details shared.
Adani group said that through a 10-year equity programme with long-only global investors formulated in 2016, its portfolio has attracted over $9.5 billion since 2019. This does not include the recent stake sale in Adani Power to GQG Partners.
"This programme has supported strategic priorities, including pre-payment of margin-linked share-backed financing," it said.
The promoter-level entity has generated Rs 30,900 crore - excluding the amount raised through the stake sale to GQG in its power arm - through secondary market transactions since March 2023.
Adani group, earlier this year, was hit by a damning report released by the US-based Hindenburg Research. The activist-short seller had in January accused the Gautam Adani-led conglomerate of accountancy fraud and stock manipulation, which led to its 10 listed entities losing Rs 12 lakh crore or $145 billion within a month of the report's release. Adani's stocks, however, started recovering in March after the US-based GQG bought stakes worth Rs 15,446 crore in the then-embattled business group.
Since the Hindenburg episode, Adani group has taken strenuous steps to consolidate its financial position, say analysts. “The group has been striving to improve its credit profile consistently especially since its plan for a landmark fundraising was derailed earlier this year due to the Hindenburg debacle,” said Nirav Karkera, Head of Research, Fisdom.
Balance sheets are now stronger and the ability to service debt appears to have improved significantly over the past couple of months. The group has been able to secure funds through a rather diverse consortium of industry participants including banks and capital markets.
The group has been able to attract institutional capital with seemingly long-term strategic commitments which works in favour of the group's financial prowess while reaffirming credibility to a meaningful extent, Karkera explained.
“One can expect the group to revisit expansionary plans and incidental fundraising agenda sooner than later,” he added.
Some market participants also pointed out that total equity increasing to 55.77 percent of the total assets in FY23, from 40.16 percent at the end of FY19, hints at better sentiment for Adani group stocks. This is also a reflection of investor confidence returning, especially after the allegations faced by the group, they claimed.
Adani group says equity worth Rs 2.36 lakh crore deployed in FY23, more than half of total gross assets - Moneycontrol
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