Six months after a Hindenburg report led to a meltdown in Adani Group stocks, the conglomerate is trying to strike a balance between growth, capex and deleveraging its debt. Though the challenges still linger, sparked by the Hindenburg report alleging accounting fraud, stock manipulation, and routing of funds through foreign shell companies, all of which the firm has refuted, there is some breathing space
The Gautam Adani-led group, which has a top line of Rs 2.62 lakh crore and had lost over $100 billion in market capitalisation at one point, is gradually charting a new course by rebalancing its growth ambitions, slowing down on big-ticket acquisitions, deleveraging, and strengthening its balance sheet
The Adani family recently divested stakes of Group CFO Jugeshinder “Robbie” Singh in four group companies to raise $1.87 billion (Rs 15,500 crore) from global private equity firm GQG Partners. In addition, three companies have board approval to raise funding of $4 billion over the next 12 months. “There will be more equity dilution if they plan to grow at the same pace as earlier. It’s a Catch-22 situation. If growth slows down, the valuations will correct further,” said Ambareesh Baliga, a seasoned observer of the markets
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Adani Group has been diluting equity since 2019 when global players like TotalEnergies, Qatar Investment Authority, and Abu Dhabi-based IHC group invested a total of $5.79 billion. “Over the next 20 years, Adani portfolio companies and promoters want to raise $50 billion of equity... We want to invest close to $500 billion in core infra as a base case. We will run this programme of equity for the next two decades,” says Group CFO Jugeshinder “Robbie” Singh
Stakeholders Empowerment Services (SES), a proxy advisory firm, terms the Adani Group’s debt concerns as overstated. Rohit Chawda, acting CEO at Taurus Mutual Fund, agrees. “The current challenging period will only drive the company to make more prudent investment choices, and corporate governance standards will improve even more,” said Chawda
“Our balance sheet, assets, and operating cash flows continue to get stronger and are now healthier than ever before,” Adani Group Chairman Gautam Adani had said while sharing the group’s operational performance with shareholders in July. His bet is on infrastructure assets, which generate stable revenues and contribute over four-fifths of the group’s Ebitda. A proxy for cash flow generation capacity, Ebitda shows the group’s core operating performance
Adani Enterprises Ltd (AEL) is back in the market with a Rs 12,500-crore equity raising plan. AEL’s biggest bet is green hydrogen (through AEL subsidiary Adani New Industries Ltd, or ANIL), where it is setting up an ecosystem—from the generation of green hydrogen, downstream products (ammonia and urea), to manufacturing of supply chain products like wind turbines, batteries, and electrolysers
The Adani Group is focussing on consumer-centric businesses for growth, whether it is airports, energy and gas distribution, real estate, or FMCG. Many of these are extensions of B2B businesses—for instance, the entire power chain. It has expanded from power generation to transmission to distribution. Ultimately, distribution and metering will be a bigger part of the energy solutions business by 2028, according to Group CFO Jugeshinder “Robbie” Singh
Adani Group currently has a portfolio of 10 companies. “We will have close to 14-15 companies by around 2033. We have an objective to hold a certain percentage in our portfolio. Within that portfolio, when we recycle capital, it is not dilution,” said Group CFO Jugeshinder Singh, adding, “Our objective is to get our portfolio into a position where the current cash that we hold in the bank and free cash flow is greater than any debt maturity requirement. At a portfolio level, we will get there by 2025."
While the Supreme Court-constituted expert committee on the Adani stocks crash did not find any regulatory failure, the sword of ongoing investigations by the Securities and Exchange Board of India (Sebi) is still hanging over the group’s head. “We remain confident in our governance and disclosure standards,” Gautam Adani had said, putting up a brave front before shareholders at the AGM. Meanwhile, Adani Group’s stocks are showing a gradual recovery
Adani Group is also expanding internationally. Amidst the crisis, Gautam Adani’s greatest asset remains his management team and board, standing firmly by his side. If he successfully navigates the current challenges, he will surely write a new chapter in his entrepreneurial journey