Adani Group Presents Robust Financials; Emphasizes Growth Without Reliance On External Debt

Billionaire Gautam Adani’s conglomerate has unveiled a compelling financial overview, emphasizing its strong cash flows and sustained profitability that ensure growth without the need for heavy reliance on external debt.

In a presentation to investors on Monday, the diversified group – spanning industries from ports to energy – highlighted its financial resilience despite facing legal challenges, including a recent US court indictment involving founder chairman Adani and two other executives over alleged bribery linked to solar power contracts.

The presentation underscored the Adani Group’s impressive growth trajectory, showcasing its ability to generate strong, consistent profits and cash flows.

The group’s increased focus on equity-based funding has significantly reduced its dependence on debt in recent years.

Equity now comprises nearly two-thirds of its total asset creation, a remarkable shift compared to just five years ago.

In the past six months alone, the group invested Rs 75,227 crore, with debt increasing by only Rs 16,882 crore, reflecting the company’s self-sustained growth model.

A supplementary note shared with investors highlighted the Adani portfolio’s liquidity, ensuring that it can comfortably meet its debt servicing obligations for the next 12 months.

As of 30 September 2024, the group held a cash balance of Rs 53,024 crore – approximately 21% of its total outstanding debt – sufficient to cover debt servicing for the next 28 months.

Ambitious Investment Plans For Next Decade

In the past, the group also reiterated its ambitious investment plans, revealing that it aims to deploy over Rs 8 lakh crore (USD 100 billion) across its companies over the next decade.

Fund Flows from Operations (FFO), or cash profits, totaled Rs 58,908 crore for the past 12 months, with a growth rate of over 30% over the past five years.

Even without any further growth, the company projects it will generate Rs 5.9 lakh crore in internal cash accruals over the next decade, minimizing the need for external funding.

The group’s low debt gearing ratio of 2.46x also signals considerable capacity for further borrowing if needed.

Additional key highlights from the presentation include a 17% increase in EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization), which grew to Rs 83,440 crore over the past year, thanks to the stability of its infrastructure projects.

The Adani Group noted that its existing cash flows alone could service all its debt within the next three years.

The group’s gross assets have risen by Rs 75,227 crore, against a modest Rs 16,882 crore increase in debt, bringing its total asset base to Rs 5.5 lakh crore.

With an average borrowing cost of 8.2%, the group also benefits from its improved credit ratings, making it the lowest borrowing rate in the last five years.

As of now, the Adani Group’s long-term debt from domestic banks stands at Rs 94,400 crore, well-backed by a cash reserve of Rs 53,024 crore, most of which is parked with Indian banks.
Borrowings from global banks account for 27% of its total debt.

Also Read: Adani Group Sees Significant Growth With 25.5% EBITDA Rise In H1 FY25