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Adani expects 20% rise

Adani group is expected to report a 20 per cent rise in its earning before interest

The Adani group is expected to post a 20 percent rise in its EBITDA to Rs 61,200 crore for the year ending March 2023, according to a note the group submitted to lenders recently.

The group earned Ebitda of Rs 57,299 crore in the previous fiscal year ending March 2022.

The group’s gross debt was Rs 2.27 trillion as of March 31 this year and it is not expected to take on any more debt until it reduces its existing debt. Net debt for the financial year ending March 2023 has been projected at Rs 1.95 trillion after paying off debt worth Rs 23,590 crore during the financial year ending March 2023, according to a note submitted to lenders and regulators on future projections recently.

When contacted, a company official said there is no significant refinancing risk and short-term liquidity requirement as there is no short-term significant debt maturity outside the credit envelope. “International and domestic credit rating agencies have affirmed the ratings across the portfolio, indicating high quality of the underlying credit quality,” the official said.

Shares in the Adani group came under a bear attack on January 23 this year after New York-based short seller Hindenburg accused the group of market manipulation. The group has denied the allegations while pointing to a conflict of interest for Hindenburg as the short seller took positions in the group’s overseas-listed debt.

Since that report, the group has sold stakes in four companies and used the proceeds to prepay $3 billion worth of debt.
All the group’s shares have recovered 47 percent from the lows reached at the end of February.

In a presentation, the group said the value of total gross assets was Rs 3.91 trillion as of March this year. The group informed the banks that it has consistently diversified its long-term debt portfolio and reduced its exposure to banks by leveraging other sources of capital.

As of March 31, the company’s debt exposure consisted of 39 percent in bonds, 29 percent to global international banks and 32 percent to Indian banks and local NBFCs.

During the meetings, lenders reaffirmed their commitment to the group and said they would continue to lend to companies that have stable cash flows.

The group informed bondholders that their dollar-denominated debt is secured with an approximate average interest cost of around 5-6 percent. The recent rise in interest rates overseas has had minimal impact on debt costs and debt service as most of the ECB’s debt is fixed rate.

Adani’s forex policy covers all exchange costs and provides 220 basis points of built-in margin in maturing facilities that are due to mature over the next few years.

Regarding its growth plans, the group said that its portfolio companies have successfully implemented large projects in the field of infrastructure and utility space.
“While the companies have consistently delivered, with a strong cash flow generation profile, supported by a long-term contractual framework for projects as well as a robust asset base,” the note said.

Growth in the coming years will come from Adani Enterprises’ existing major infrastructure, cement and flagship businesses and consumer goods business.

Adani‘s portfolio companies operate in utilities and infrastructure, with more than 81 percent of EBITDA generated from core infrastructure businesses that provide assured cash flow generation.

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