Adani Group Repays $2.65 Billion Loans, Srocks Rise
Shares of Adani Group witnessed a 3% increase in Tuesday’s trading session as the conglomerate announced the repayment of loans amounting to $2.65 billion. The company informed exchanges about this development on Monday, leading to a positive market response.
This repayment marks the settlement of two separate debt accounts. In a statement, the Adani Group revealed that its net debt to EBITDA ratio stood at 3.27, while the net debt to run-rate EBITDA ratio was at 2.81.
The loans that were repaid include margin-linked share-backed financing of $2.15 billion, which was paid off by the company before the March 31 deadline. Additionally, the group cleared $500 million of debt taken for the acquisition of Ambuja Cement and paid $203 million in interest in March.
Adani Enterprises experienced a 3% surge, emerging as the top gainer on the Nifty50 index during early trade. Other companies within the Adani Group, such as Adani Ports & Special Economic Zone, Adani Power, Adani Green Energy, Adani Total Gas, ACC, Ambuja Cements, and New Delhi Television, also saw gains ranging from 0.30% to 2.80% on the NSE.
However, Adani Transmission was the only stock trading in the red.
According to the Adani Group, “This debt ratio is in the lowest quartile for a large infrastructure portfolio.”
The group further stated, “The successful deleveraging program demonstrates strong liquidity management and capital access at the sponsor level, even in volatile market conditions. This complements the prudent capital management adopted by all portfolio companies.”
As of Monday, the Adani Group’s listed companies held a cash balance of Rs 40,351 crore, as reported in a group credit summary. Gross assets increased to Rs 4.23 lakh crore, representing a YoY growth of Rs 1.06 lakh crore.
During FY23, the group achieved an EBITDA of Rs 57,219 crore, marking a YoY growth of 36.2%. The core infrastructure segment accounted for approximately 83% of the portfolio EBITDA, ensuring resiliency, stability, and predictability of cash flow due to the majority of contracted projects, according to the Adani Group.
Vinit Bolinjkar from Ventura Securities commented, “Adani loan repayment is not new. They have previously demonstrated this, and it is just a new press release. However, it signifies to the market that the group is financially robust. Despite ambitious growth plans requiring substantial capital, they have managed their finances effectively. Additionally, their cash flows are robust.” Bolinjkar added that these factors are expected to send strong signals to the market and potentially lead to further stock actions.
The Adani Group’s debt profile has faced increased scrutiny since a US-based short-seller published a report alleging fraud and stock manipulation within the conglomerate’s various businesses. The group has firmly denied these allegations.
Following the report’s publication, stock prices of listed Adani Group companies plummeted, while bond yields surged. This adversely affected investor and lender confidence and made it challenging for the group to secure fresh capital. Consequently, the Adani Group’s expansion plans were temporarily halted.
About Adani Group:
The Adani Group is a multinational conglomerate based in Ahmedabad, India. It was established by Gautam Adani in 1988 as a commodity trading enterprise. The group’s diverse portfolio encompasses various sectors such as port management, electric power generation and transmission, renewable energy, mining, airport operations, natural gas, food processing, and infrastructure. Coal-related businesses contribute to over 60 percent of the Adani Group’s revenue.
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