Adani eyes Rs 90,000 cr EBITDA in 2-3 yrs on the back of robust growth

The Embattled Adani Group is looking to achieve 20 per cent year-on-year growth in pre-tax earnings to Rs 90,000 crore EBITDA in 2-3 years on the back of strong growth in businesses ranging from airports to energy, the company notes.

Earlier this month, the group repaid loans totaling $2.65 billion to complete a prepayment program to reduce overall leverage in a bid to restore investor confidence following a report owed to a short seller in the US.

The Port-to-Energy group is now looking forward to strong growth in sectors such as airports, cement, renewables, solar panels, transportation and logistics, and energy and transportation, he said, adding that many of Adani’s new investments in infrastructure will also start to pay off. Generate cash in the coming years.

Adani is expected to see more than 20% increase in EBITDA on a consolidated basis in the coming years as it drives strong and sustainable growth across its business portfolio. The note said its target before interest, tax, depreciation and amortization (EBITDA) of over Rs 90,000 crore is expected by FY23.

In recent years, the group has made significant investments in ports and completed important projects across renewable energy sources, transportation and ports.

Businesses such as airports and renewables are also showing improved cash flows. Its solid asset base, built over three decades, supports flexible critical infrastructure and ensures high asset performance throughout their life cycles.

The Group’s listed EBITDA portfolio increased by 36 per cent year-on-year to Rs. 57,219 crore in FY23 (April 2022 to March 2023 financial year). The core infrastructure business, which makes up 82.8 per cent of the portfolio including power, transport and logistics and major infrastructure projects of Adani Enterprise Ltd, posted a solid 23 per cent year-on-year growth in EBITDA to 47,386 crores. rupee.

The existing AEL business also delivered a strong performance with a growth of 59% year-on-year to Rs.5,466 crore. AEL’s current business makes up 10 percent of its portfolio.

With around 83 per cent of its EBITDA generated from its core infrastructure business, the Adani Group portfolio operates in the utilities and infrastructure sectors, providing guaranteed and consistent cash flows. The group has set its sights on growth across sectors as diverse as airports, cement, renewables, solar panels, ports, power and transportation.

The past year has seen a period of remarkable progress for Adani as its portfolio’s strong growth of 36% was simultaneously complemented by an effective deleveraging strategy as evidenced by an improved net debt to EBITDA ratio.

Combined portfolio net debt to EBITDA improved to 3.27x in FY23 from 3.8x in FY22. The note said net debt to EBITDA improved to 2.8x in FY22 from 3.2x in FY22. Financial 23 which highlights the strong financial discipline of the group amid strong growth.

Adani Group management confirms that there is no significant debt maturity looming in the near term, indicating no material refinancing risks or liquidity requirements in the near term.

The total net worth of assets is Rs. 3,91,000 crore. Over time, the Group has diversified its long-term debt portfolio and reduced its exposure to banks while expanding its funding sources. Current debt is distributed among bonds (39 percent), global international banks (29 percent), PSU and private banks and NBFC (32 percent).

The group’s exposure remains less than 1 percent of total bank exposures in India, and leading Indian banks, including SBI and other PSUs, have expressed a debt/equity relief of EBITDA of 3.2 percent.

The note added that the group’s dollar debt is also fully hedged, and the recent interest rate hike by the European Central Bank is expected to have little impact on debt servicing costs since most European central banks are fixed rate.

The Adani Group has fully repaid the $2.15 billion in loans obtained by pledging equity in the conglomerate’s listed companies as well as another $700 million in loans obtained for the acquisition of Ambuja Cement.

Further, the memorandum states that the promoters have 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 crores).

US short seller Hindenburg Research in January released a damning report alleging accounting fraud and share price manipulation in the Adani Group, which led to a stock market crash that wiped out about $145 billion from the conglomerate’s market value at its lowest point.

The Adani Group has denied all of Hindenburg’s claims and is planning a comeback strategy. The group has reformulated its ambitions as well as prepaid some loans to appease investors.

The cash balance and foreign financing funds (together at Rs. 77,889 crores) are significantly higher than the debt maturity cover for FY24, 25 and 26 of Rs. 11,796 crores, Rs. 32,373 crores and Rs. 16,614 crores, respectively, at the combined portfolio level.