Adani Group has demonstrated its financial resilience by showcasing growth without external debt. In a recent presentation to investors, the conglomerate highlighted its robust cash flows and profits, underscoring a strategic shift toward self-sustained growth.
Strong financial position
The Adani Group revealed that equity now accounts for nearly two-thirds of its total asset creation, marking a significant improvement from five years ago. Over the past six months alone, the group invested ₹75,227 crore while increasing debt by only ₹16,882 crore.
“Adani portfolio companies possess sufficient liquidity to cover all debt servicing requirements for at least 12 months,” the note accompanying the presentation stated. As of September 30, 2024, the group reported ₹53,024 crore in cash reserves, equivalent to 21% of its total gross debt.
Minimal dependency on external borrowing
The group emphasized its capability to fund future growth primarily through internal cash flows. With Fund Flows from Operations (FFO) reaching ₹58,908 crore in the past 12 months and an annual growth rate exceeding 30% over the last five years, the group projects it can generate ₹5.9 lakh crore from internal accruals in the next decade. This significantly reduces the need for external debt.
The presentation also highlighted the group’s low debt gearing ratio of 2.46x, providing substantial headroom for potential borrowing.
Sustainable growth
Adani’s EBITDA for the past 12 months reached ₹83,440 crore, growing at 17%, reflecting stable and predictable income streams from infrastructure projects. Additionally, the group’s investments in assets grew by ₹75,227 crore, while debt increased minimally, showcasing sustainable growth strategies.
Strategic borrowing and lower costs
The average borrowing cost stands at 8.2%, the lowest in five years, aided by improved credit ratings. The group’s ₹94,400 crore in long-term domestic debt is well-supported by its ₹53,024 crore cash balance. Moreover, only 27% of total debt comes from global banks, ensuring reduced exposure to foreign lending risks.
A new era for Adani
The Adani Group’s focus on leveraging internal resources and equity for expansion marks a pivotal shift in its growth strategy. By minimizing reliance on external borrowing, the group continues to solidify its financial health while advancing its long-term investment goals.
