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Adani Group Repays $2.65 Billion Loans, Shows Strong Financial Metrics in Credit Update

Deleveraging Program Demonstrates Liquidity Management and Capital Access Amid Volatile Markets


Mumbai, India - The Adani Group announced on Monday that it has successfully repaid loans totaling $2.65 billion, which were secured by pledging shares in its listed firms, and an additional $700 million in loans taken for the acquisition of Ambuja Cement. The conglomerate also 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).

The repayment includes a full prepayment of margin-linked share-backed financing amounting to $2.15 billion and the prepayment of $700 million debt taken for the Ambuja Cement acquisition, along with an interest payment of $203 million. The Adani Group highlighted that the deleveraging program exemplifies its strong liquidity management and capital access, even in volatile market conditions, while reinforcing the solid capital prudence observed across all portfolio companies.



The credit update provided by the Adani Group showcases significant improvements in key financial metrics. The combined net debt to EBITDA ratio for the portfolio decreased from 3.81 in FY22 to 3.27 in FY23. The run rate EBITDA surged from Rs 50,706 crore in FY22 to Rs 66,566 crore in FY23, reflecting substantial growth.

The credit update further states that the banking lines of the Adani Group continue to demonstrate 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, reinforcing the market's faith in their financial stability.

The Adani Group faced allegations of accounting fraud and stock price manipulation by US short-seller Hindenburg Research in January, which led to a significant decline in the conglomerate's market value. The group has consistently denied all allegations and has undertaken a comeback strategy aimed at rebuilding investor trust. As part of this effort, the group has prepaid some loans and made improvements to its financial metrics.

The updated credit report indicates that the Debt Service Cover Ratio (DSCR) improved to 2.02x in FY23 from 1.47x in FY22. Gross assets increased to Rs 4.23 lakh crore, representing a rise of Rs 1.06 lakh crore. The Gross Asset to Net Debt cover ratio improved to 2.26x in FY23 from 1.98x in FY22.

The Adani Group's continued investments in core infrastructure, with gross assets of Rs 3.77 lakh crore (accounting for 89 percent of the portfolio), provide long-term visibility of cash flow over multiple decades. The group's cash balance saw a significant increase of 41.5 percent, reaching Rs 40,351 crore compared to Rs 28,519 crore. Free Flow from Operations (FFO), calculated as EBITDA less finance cost and tax paid, amounted to Rs 37,538 crore.

Both the cash balance and FFO, totaling Rs 77,889 crore, surpass the debt maturity cover for FY24, FY25, and FY26, which stand at Rs 11,796 crore, Rs 32,373 crore, and Rs 16,614 crore, respectively, at the combined portfolio level.

At the close of trading on the BSE, shares of Adani Enterprises stood at Rs 2,433.95, representing a decrease of Rs 11.00 or 0.45 percent.

The Adani Group's efforts to strengthen its financial position and demonstrate robust financial metrics serve to restore investor confidence and pave the way for future growth and expansion. Despite the challenges faced earlier this year, the group's proactive approach in addressing concerns and implementing measures to improve its financial health is commendable.

The successful repayment of $2.65 billion in loans signifies the Adani Group's commitment to reducing its debt burden and strengthening its balance sheet. By repaying the loans, which were secured by pledging shares in its listed firms, the group has demonstrated its ability to manage liquidity and access capital even in volatile market conditions. This achievement reflects the group's prudent capital management practices across its portfolio companies.

In addition to the loan repayments, the Adani Group completed the sale of shares in four listed entities to GQG Partners for $1.87 billion. This strategic move not only helps generate substantial funds but also showcases the group's ability to attract investments from leading global players.

The credit update provided by the Adani Group highlights significant improvements in key financial metrics. The combined net debt to EBITDA ratio, a crucial indicator of the group's debt sustainability, decreased from 3.81 in FY22 to 3.27 in FY23. This reduction demonstrates the group's efforts to enhance its financial resilience and ability to generate earnings relative to its debt obligations.

Furthermore, the run rate EBITDA witnessed a substantial increase from Rs 50,706 crore in FY22 to Rs 66,566 crore in FY23, indicating robust growth and improved operational performance across the portfolio companies. This positive trend reflects the Adani Group's effective management strategies and its focus on maximizing operational efficiencies.

The credit update also emphasizes the continued confidence of banking lines in the Adani Group. The availability of new debt disbursements and the rollover of existing lines of credit highlight the strong relationship between the group and its banking partners. Additionally, both domestic and international rating agencies have reaffirmed their ratings for all group companies, reinforcing the market's trust in the group's financial stability and creditworthiness.

The Adani Group's commitment to transparency and accountability is evident in its efforts to address allegations made by Hindenburg Research earlier this year. The group has consistently denied all allegations of accounting fraud and stock price manipulation, focusing instead on implementing a comeback strategy to rebuild investor confidence. By undertaking initiatives such as loan prepayments and showcasing improved financial metrics, the group is actively demonstrating its commitment to governance and its determination to regain market trust.

Looking ahead, the Adani Group's continued investments in core infrastructure, which constitute 89 percent of its portfolio, provide long-term visibility of cash flow and support future growth prospects. The group's cash balance, which increased by 41.5 percent to Rs 40,351 crore, and its strong FFO of Rs 37,538 crore further strengthen its financial position. With cash balance and FFO exceeding the debt maturity cover for the next three years, the group is well-prepared to meet its financial obligations and fund its growth plans.


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