Adani enhances credit profit through strategic initiatives
For the first time, the equity deployed increases to more than half the total assets — at 55.77%; equity for FY23 was INR 2.36 lakh crore against net debt of INR 1.87 lakh crore
Ahmedabad: In a significant milestone, the Adani Group, through a series of strategic initiatives, has increased its liquidity position at the portfolio level to finish with a cash balance of INR 42,115 crore at the end of the June quarter. The portfolio companies diligently focused on bolstering their financial standing, ensuring a robust foundation for their ambitious projects.
The following are the key measures that contributed to this positive transformation:
Significant deployment of equity resulted in total equity increasing to 55.77% of the total assets as compared to 40.16% at the end of FY19. Equity deployed by the end of FY23 was INR 2,35,812 crore, much higher than net debt of INR 1,87,087 crore.
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% and 21.7% respectively. EBITDA in the June FY24 quarter increased by 42% year-on-year and was more than 40% of the entire FY23. As against these, net debt has grown at only 14.56% CAGR, resulting in consistently improving leverages ratios.
Net debt to run-rate EBITDA for FY23 fell to 2.8x as compared to 3.2x a year ago
Gross Assets to Net debt was 2.3x at the end of FY23
Net Debt to Equity at 0.8x at the end of FY23
Debt coverage ratio improved to 2.02x for FY23 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.
The core infrastructure and utility platform accounted for 83% of total EBITDA in FY23 and 86% in the June FY24 quarter. Contractual businesses accounted for 82% of the portfolio EBITDA in FY23. Such a high contribution offers great stability and multi-decadal visibility on earnings.
Well-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.
Free funds flow plus cash for FY23 was 2.72x against average debt maturity cover of 6.55 years, thus eliminating refinance risks. Free funds flow is EBITDA less finance cost paid less tax.
Through a 10-year equity programme with long-only global investors formulated in 2016, the Adani portfolio has attracted over USD 9.5 billion (does not include the recent stake sale in Adani Power to GQG Partners) since 2019. This programme has supported strategic priorities, including pre-payment of margin-linked share-backed financing.
Promoter level entity has generated INR 30,900 crore (does not include recent stake sale in Adani Power to GQG Partners) through secondary market transactions since March 2023.