Adani Group achieves $2.65bn deleveraging, enhances debt metrics in FY23

The Adani Group, led by Gautam Adani, announced on Monday that it has repaid loans totaling $2.65 billion as part of a prepayment program aimed at reducing overall leverage. This move is an attempt to regain investor trust following a damaging report by US short seller Hindenburg Research. The conglomerate stated that its cash balance in the listed portfolio has increased by 41.5% to $4.75 billion (Rs 40,351 crore), as disclosed in its credit update for FY23.

According to the Adani Group, the successful deleveraging program demonstrates strong liquidity management and capital access at the sponsor level, even in volatile market conditions. They emphasized the solid capital prudency adopted by all portfolio companies. In the credit note released on Monday, the Adani Group revealed that it fully prepaid $2.15 billion in loans secured by pledging shares in the conglomerate's listed firms before March 12, well ahead of the March 31 deadline. An additional $700 million in loans taken for the acquisition of Ambuja Cements Ltd were also repaid.

The credit update further mentioned that the promoters completed the sale of shares in four listed group entities to GQG Partners, a leading global investment firm, for $1.87 billion (Rs 15,446 crore). In January, Hindenburg Research released a report alleging accounting fraud and stock price manipulation at the Adani Group, causing a significant drop in the conglomerate's market value. Adani Group denied all allegations and has been working on a comeback strategy. Last month, Adani Enterprises Ltd and Adani Transmission Ltd announced a plan to raise Rs 21,000 crore through a share sale.

The credit update highlighted significant improvements in key financial metrics. The portfolio's combined net debt to EBITDA ratio decreased from 3.81 in FY22 to 3.27 in FY23, while run rate EBITDA surged from Rs 50,706 crore in FY22 to Rs 66,566 crore in FY23. The Adani Group also stated that the banking lines of credit continue to show confidence by disbursing new debt and rolling over existing lines of credit. Additionally, both domestic and international rating agencies have reaffirmed their ratings for all group companies.

During FY23, the Debt Service Cover Ratio (DSCR) improved to 2.02x from 1.47x in FY22, and Gross Assets increased to Rs 4.23 lakh crore, up by Rs 1.06 lakh crore. The Gross Asset / Net Debt cover also improved to 2.26x in FY23 from 1.98x in FY22. The credit update mentioned continued investments in core infrastructure, with gross assets of Rs 3.77 lakh crore (89% of the portfolio), providing long-term multi-decadal visibility of cash flow. The cash balance was higher by 41.5% at Rs 40,351 crore compared to Rs 28,519 crore. Free Flow from operations (FFO) was Rs 37,538 crore, and when combined with the cash balance, it amounted to Rs 77,889 crore. This total is significantly higher than the debt maturity cover for FY24, FY25, and FY26, which are Rs 11,796 crore, Rs 32,373 crore, and Rs 16,614 crore, respectively, at the combined portfolio level