Gautam Adani Claims Growth is Possible Without External Debt, business group shared some impressive financial details
Billionaire Gautam Adani’s business group shared some impressive financial details with investors on Monday, highlighting how its strong profits and cash flow can support growth without needing to rely on outside debt. This conglomerate, which operates in sectors from ports to energy, is currently facing legal challenges in a US court, where Adani and two other executives have been accused of bribing Indian officials to secure solar power contracts. Despite this, the company presented its steadily increasing profits and cash flow to investors, showing that it has been reducing its reliance on debt for future growth.Today, equity makes up nearly two-thirds of the company’s total asset creation, a significant change from five years ago. In the last six months alone, the group has invested about ₹75,227 crore, while its total debt has only increased by ₹16,882 crore.
Along with the presentation, a note was shared with investors detailing the group’s liquidity situation. It stated, “Adani portfolio companies have enough liquidity to meet all debt servicing needs for at least the next 12 months.” As of September 30, 2024, these companies had ₹53,024 crore in cash, which is about 21% of their total gross debt. This amount is enough to cover debt servicing for the next 28 months.
Growth Without Debt
In the past, the group announced plans to invest over ₹8 lakh crore (around USD 100 billion) across its companies over the next decade.The cash profits, known as Fund Flows from Operations (FFO), reached ₹58,908 crore in the last year, growing by more than 30% over the past five years. Even if there is no growth, the group expects to invest ₹5.9 lakh crore solely from its internal cash flow in the next ten years, which means it won’t need much external debt.
Other key points from the presentation included the EBITDA (earnings before interest, tax, and depreciation) for the past year, which was very stable and predictable due to its infrastructure projects, growing by 17% to ₹83,440 crore. The current annual cash flow alone could pay off all the debt in just three years.The total assets or investments have risen by ₹75,227 crore, while total debt has only increased by ₹16,882 crore. The overall asset base has now reached ₹5.5 lakh crore.
The average borrowing cost is currently at 8.2%, the lowest it has been in five years, thanks to improved ratings across the group’s companies. The Adani Group’s long-term debt from domestic banks stands at ₹94,400 crore, which is balanced against a cash reserve of ₹53,024 crore, most of which is held in Indian banks. Borrowings from international banks make up 27% of the total debt.
