Synopsis
The brokerage referred to a lower quantum of pledged shares, stronger debt coverage ability, and better relative valuations for some of the companies to justify its current assessment of the group, after billionaire founder Gautam Adani and his nephew Sagar Adani were indicted late November on alleged impropriety charges by the US Department of Justice.
MUMBAI: The Adani Group, currently facing impropriety allegations involving one entity of its diversified business empire, is now on a stronger footing than when the to-date unproven charges by US short-seller Hindenburg dramatically shrank the conglomerate’s market value early 2023, global brokerage Bernstein said, citing both operating and financing metrics.
The brokerage referred to a lower quantum of pledged shares, stronger debt coverage ability, and better relative valuations for some of the companies to justify its current assessment of the group, after billionaire founder Gautam Adani and his nephew Sagar Adani were indicted late November on alleged impropriety charges by the US Department of Justice.
Bernstein covers three of the group’s listed companies – Ambuja Cement, Adani Ports and Special Economic Zone and Adani Green Energy. The brokerage has not changed its rating for these shares after the US regulatory indictment.
While the overall debt of the Adani Group at Rs 2.79 lakh crore is higher than the Rs 2.41 lakh crore as of March 2023, group’s net debt-to-EBITDA ratio – a debt servicing metric relative to operating profit – has seen a sharp drop.
The group also has higher cash reserves of Rs 39,000 crore at the end of September, as against Rs 22,300 crore as of March last year, said the brokerage.
“If we look at the evolution of share pledges for the group, there has been a dramatic drop across companies: This is one area where the group has taken significant action over the past year and a half,” Bernstein said in its report. As compared with 17% in December 2022, none of the promoter’s shares are currently pledged in Adani Ports and SEZ. In Adani Power, pledged shares are down to 1% from 25% earlier.
At a group level, the next dollar bond is maturing in August 2026; this compares with a repayment due in 2024, the last time the group stocks and listed securities saw a major erosion in value.
( Originally published on Dec 03, 2024 )
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