Adani Group Aims To Boost Earnings By 50%, Cut Debt In Next 2 Fiscals

The latest initiative by the group targets to accelerate earnings growth. This move is being pegged as significant amid the aftermath of the short-seller report by Hindenburg Research. 

The group officials have chalked out plans to decrease the leverage ratio from the current 4.2 times to 3.1 by the end of FY24, by increasing earnings rather than reducing debt, the report said citing anonymous sources. 

In recent meetings with creditors, Adani officials outlined plans to lower the group’s leverage ratio from 4.2 times now to 3.1 by the end of FY24, mainly by increasing earnings rather than reducing debt, two people with direct knowledge of Adani’s strategy told the Mint on the condition of anonymity. 

The source added that the group’s overall debt is likely to be brought down slightly by 5-10 per cent from $23 billion during FY2024. The Adani Group plans to increase its EBITDA (earnings before interest, depreciation, tax and amortization) by 20-22 per cent year-on-year to further cut down the leverage ratio.

According to the report, the group’s net debt-to-EBITDA ratio came down to 3.2 times in March 2022 and saw an increase of 4.2 during FY24. This ratio was 7.6 times in 2013. As on March 31, the group's debt stands at Rs 2.27 trillion. 

Currently, 39 per cent of Adani's dept are through bonds, 29 per cent from international banks and 32 per cent from domestic banks and NBFCs, the report added. 

Much of the growth is expected from ports, cement, renewables, solar panel and roads business during FY24-25," the first person said.

The group has asked its creditors to cut down the leverage in FY24. The group further plans to boost the annual EBITDA growth rate of Adani Ports, Adani Green, Adani Power, Adani Total Gas and Adani Transmission by 20-22 per cent, the people cited above told the Mint. 

In the latest move, the group seeks to increase efficiency in business to raise revenue levels and decrease debt. 

A major part of Adani group's growth is expected from cement, solar panels, roads, and ports in FY24-25, the report said.