Amid bribery charges in US, Adani Group shows investors it can grow without external debt

Billionaire Gautam Adani’s conglomerate, Adani Group, on Monday presented its financial performance and credit strength to investors, highlighting robust profits and cash flows that enable growth with minimal reliance on external debt. The outreach comes in the wake of legal allegations in a US court against Gautam Adani and two other executives over alleged bribery to secure solar power contracts.

The ports-to-energy giant underlined consistent profitability across its portfolio companies and reported cash reserves of ₹53,024 crore as of September 30, 2024, representing 21% of total gross debt.

In a note shared with investors, the Group said, "Adani Portfolio companies have sufficient liquidity to cover all debt servicing requirements for at least 12 months. As of September 30, 2024, Adani Portfolio companies had a cash of Rs 53,024 crore, which was close to 21 per cent of its total gross debt outstanding".

This liquidity is sufficient to cover all debt servicing requirements for the next 28 months, the note said.

The group reiterated its plans to invest over ₹8 lakh crore ($100 billion) across its portfolio companies over the next decade.

Adani’s Fund Flows from Operations (FFO) for the last twelve months stood at ₹58,908 crore, growing at over 30 per cent annually for the past five years. Based on this trajectory, the group estimates it could invest ₹5.9 lakh crore over the next decade without significant external borrowing.

At the portfolio level, the group reported a low debt gearing of 2.46x, which, according to the presentation, means it has massive headroom for debt.

The presentation also highlighted a 17% growth in EBITDA (earnings before interest, taxes, depreciation, and amortisation) over the last twelve months, noting that the group's annual cash flows could pay off all its debt within three years.

Adani Group's gross assets have risen to ₹5.5 lakh crore, driven by investments of ₹75,227 crore over the past six months. The average cost of borrowing has dropped to 8.2%, the lowest in five years, due to upgrades in credit ratings across its companies.

As of September 30, 2024, the group’s long-term debt from domestic banks stood at ₹94,400 crore, while cash reserves amounted to ₹53,024 crore, most of which were held with Indian banks. Borrowings from global banks accounted for 27% of its total debt.

Adani Green Energy Limited continued its steady progress toward its goal of achieving 50 GW of renewable capacity by 2030, with operational capacity growing by 34% year-on-year to 11.2 GW. The company completed a joint venture with TotalEnergies, adding a 1,150 MW renewable energy portfolio.

Adani Ports and Special Economic Zone Limited (APSEZ) reported a 9% increase in cargo volumes, reaching 220 million metric tons in the first half of FY25.

Adani Power Limited reported a 29% increase in sales to 46 billion units during the first half of FY25, driven by higher power demand and capacity additions. Its consolidated PLF improved to 72%, up from 59% in the same period last year.

Adani Total Gas Limited expanded its network, commissioning new CNG stations and pipelines while achieving a 20% increase in CNG volumes year-on-year. It also made strides in renewable energy adoption, commissioning India’s first LNG retail outlet in Tiruppur.