In the first half of FY24, the operating income of the Adani portfolio firms increased by a record 47% to over Rs 43,000 crore.
Adani Group’s market value has doubled since February 24, which has refocused attention on the conglomerate’s willingness to pursue growth. With a plan in place to invest $100 billion over the following ten years, it’s prepared. From the post-Hindenburg report low of Rs 6.8 lakh crore, the group’s market capitalization has rebounded to approximately Rs 14 lakh crore.
Even if it is less than the height of Rs 19.8 lakh crore, all worries were allayed by the support of well-known investors, good regulatory rulings, and expansion in the main infrastructure business. Adani Group’s investment plan, spearheaded by five of its major portfolio companies—Adani Green Energy Ltd., Adani Energy Solutions Ltd., Adani Ports & Special Economic Zone Ltd., ACC Ltd., and Ambuja Cements Ltd.—for a green energy transition has further boosted trust.
$100-Billion Change in Energy To help the group transition to clean energy and achieve net zero emissions by 2050, these companies intend to invest a total of $100 billion over the course of the next ten years. Large-scale renewable energy sources and fully integrated manufacturing with end-to-end EPC capability—all in one single location—that are ideally positioned to promote cost efficiency—make last-mile green hydrogen solutions possible, and this spending will contribute to their creation. The business now has a robust $54 billion asset base, and at the end of FY23, it improved its gross assets-to-net debt ratio from 2.26 times to 2.48 times. Its present $5.53 billion in cash reserves are sufficient to pay down long-term debt over the next 18 months, removing any significant risk associated with refinancing and reducing the need for short-term liquidity.
Operational Growth Record:
Operating income, or earnings before interest, tax, depreciation, and amortisation, for the Adani portfolio companies increased by a record 47% to over Rs 43,000 crore in the first half of FY24. Utility and infrastructure companies contributed roughly 86% of total, supplying steady cash flow. The Adani portfolio’s stake in the Nifty 50 Ebitda has increased significantly, more than doubling from 3% in FY19 to over 6% as of September 2023. In actuality, Adani utility’s EBITDA growth has surpassed that of utility firms in the US and Europe, causing its multiples to rerate.
Major Boost: US Support and Marquee Investors
Support from GQG Partners and other institutional investors helped to improve the mood. With returns on portfolio exceeding 84%, GQG’s gamble is already paying off. Due to its strong growth, low leverage, and core customer base that is growing faster than that of its developed rivals, the Adani utility portfolio attracted even more attention from investors worldwide. The largest boost comes from the reopening of the international financial market following the announcement of a $553 million investment in Adani Ports’ deep-water container terminal project in Colombo by the International Development financial Corp., which is supported by the US government. The financial markets interpret this money as a nod of approval from the US government, which decided that Adani Ports was not subject to Hindenburg Research’s accusations of corporate malfeasance. Claims have been consistently refuted by the group, which labels them as “malicious”. In a different transaction, Adani Green Energy secured one of the biggest project finance deals in Asia, raising $1.36 billion from foreign banks through a construction credit.
The corporation intended to raise $3 billion, and this funding was a part of that. A group of eight international banks is offering a green credit called the senior debt facility. Two household triggers were also present. All of Hindenburg’s accusations have been refuted by the lack of any unfavorable conclusions from the SEBI investigations and the committee formed by the Supreme Court. The top court also questioned the assertions that the SEBI investigation is suspect.
Additionally, the opposition’s protests were subdued by the recent election results, which saw the BJP win back Madhya Pradesh and unseat the Congress in Rajasthan and Chhattisgarh. Adani Group may experience the fastest rise in its EBITDA and cash flow due to the numerous projects that are now under development and are anticipated to be operationalized in the next years. This will help to ensure that its ambitious $100 billion investment is properly funded and capitalised.
