Adani’s projected EBITDA of more than Rs 90,000 crore is expected by FY23, according to a company note.Adani Group has set a target of achieving Rs 90,000 crore EBITDA in the next 2-3 years. This would be a significant jump from the group’s current EBITDA of around Rs 50,000 crore.
The Adani Group is a diversified conglomerate with interests in ports, energy, infrastructure, and other sectors. The group has been growing rapidly in recent years, and it is targeting to become one of the largest conglomerates in the world.
Earlier this month, the company repaid $2.65 billion in loans to complete a prepayment programme to reduce total debt in an attempt to regain investor faith following a blistering report by a US short seller.
The ports-to-energy conglomerate is eyeing robust growth in sectors such as airports, cement, renewables, solar panels, transportation and logistics, and power and transmission, it said, adding that several of Adani’s new infrastructure investments will start to bear fruit and generate cash in the coming years.
Adani expects to see a growth of EBITDA on a consolidated basis by more than 20 per cent in the next few years as it pursues robust and sustainable growth across its business range. The company’s projected EBITDA of more than Rs 90,000 crore is expected by FY23, according to the note.
In recent years, the company has made large investments in ports and accomplished major projects in renewables, transportation, and ports.
Airports and renewable energy companies are also reporting stronger cash flows. Its stable asset base has been created over three decades and supports resilient vital infrastructure while ensuring high asset performance throughout their life cycles.
In FY23 (April 2022 to March 2023 fiscal), the group’s listed portfolio EBITDA climbed 36% year on year to Rs 57,219 crore. Core infrastructure operations, which account for 82.8 percent of the portfolio and include energy, transport, logistics, and the flagship Adani Enterprise Ltd infrastructure initiatives, increased EBITDA by 23% year on year to Rs 47,386 crore.
AEL’s current businesses also performed well, increasing by 59% year on year to Rs 5,466 crore. AEL’s existing operations account for 10% of its portfolio.
The Adani Group’s portfolio operates in the utility and infrastructure sectors, delivering secure and steady cash flows, with core infrastructure companies accounting for around 83% of its EBITDA. The company has set its sights on expansion in a variety of industries, including airports, cement, renewables, solar panels, ports, power, and transmission.
Adani made considerable success last year, as its portfolio’s rapid expansion of 36% was complimented by an effective deleveraging plan, as evidenced by its improved net debt to EBITDA ratio.
In FY23, the portfolio’s overall net debt to EBITDA ratio improved to 3.27 times from 3.8 times in FY22. The net debt to run-rate EBITDA ratio improved to 2.8 times in FY22 from 3.2 times in FY23, highlighting the group’s outstanding financial discipline despite robust expansion, according to the note.
The Adani Group’s management confirms that no significant debt maturity is approaching in the near term, indicating no material refinancing risk or short-term liquidity requirement.
Gross assets have a net asset value of Rs 3,91,000 crore. Over time, the company has diversified its long-term debt portfolio, reduced its reliance on banks, and expanded its funding sources. The current debt is distributed among Bonds (39%), global international banks (29%), public sector and private banks (32%), and non-bank financial companies (32%).
The group’s exposure remains less than 1% of overall bank exposures in India, and top Indian banks, including SBI and other PSUs, have expressed satisfaction with the group’s debt/equity to EBITDA ratio of 3.2%.
The group’s dollar debt is also properly hedged, and recent ECB interest rate hikes are projected to have little impact on debt costs and servicing because most ECBs are fixed rate, according to the note.
Adani Group has fully repaid $2.15 billion in loans obtained by pledging shares in the conglomerate’s listed companies, as well as $700 million in loans obtained for the acquisition of Ambuja Cement.
The promoters also concluded the sale of shares in four listed group firms to GQG Partners, a major global investment firm, for $1.87 billion (Rs 15,446 crore), according to the note.
Hindenburg Research, a US short-seller, created a damning report in January alleging accounting fraud and stock price manipulation at Adani Group, sparking a stock market collapse that erased roughly $145 billion from the conglomerate’s market worth at its lowest point.
Adani Group has rejected all of Hindenburg’s charges and is planning a response strategy. To appease investors, the organisation has redefined its aspirations and prepaid some loans.Cash Balance and FFO (together at Rs 77,889 crore) are much higher than debt maturity cover for FY24, FY25 and FY26 of Rs 11,796 crore, Rs 32,373 crore and Rs 16,614 crore, respectively, at the combined portfolio level.