Richest Indian Gautam Adani’s conglomerate continues to seek strategic equity partners aligned with its long-term investment strategy as it expands across the energy to transport to mining sectors, debt research firm CreditSights said.
In a report, CreditSights said Adani Group is venturing into new or unrelated businesses, which are highly capital intensive.
“We still hold our view that several of the Group companies maintain elevated leverage, owing to aggressive expansion plans that are largely debt-funded and that have pressurised their credit metrics and cash flows,” it said.
CreditSights said it expects Adani Group expansion and acquisition appetite to remain robust ahead, and incremental debt on account of expansion to outpace additional EBITDA generation, which could result in further credit profile deterioration.
“We remain concerned over the Adani Group’s leverage.”
The conglomerate may invest more than USD 150 billion over the next decade in expanding new energy businesses to cement and data centres.
“The Group continues to seek strategic equity partners that are aligned with its long-term investment strategy, such as sovereign wealth funds,” the research firm, part of the Fitch Group, said in the report.
Adani Group, it said, also maintains strong relationships with existing partners, such as TotalEnergies of France, IFC, ADIA and QIA.
It has ambitious plans for its four business verticals — energy and utility, transport and logistics, materials metals and mining, and consumer.
“These include plans to expand its solar panel module manufacturing capacity to 10 GW by 2025 (from 1.5 GW current capacity), ramp up its renewable energy capacity significantly, expand its logistics business under Adani Ports and Special Economic Zone (APSEZ), and explore international opportunities in the ports and utility markets,” CreditSights said.
The group, however, does not intend to provide full-scale commercial telecom services in the future, the research firm said after a discussion with the conglomerate’s top management.
Floating rate debt only comprised 25 per cent of the group’s total debt.
“Stress tests conducted by the companies do not indicate any material financial impact from rising interest rates,” it said. “Management affirmed that it was actively reaching out to investors to assuage their key concerns in light of the recent spread widening of the Adani portfolio’s US dollar bonds.
