With the debt levels of Adani Group not having fallen meaningfully in the last six months, the management is weighing a mop-up of capital. The total debt for the leading companies in the infrastructure conglomerate, at the end of September, was Rs 2.22 trillion, more or less flat compared with the Rs 2.24 trillion at the end of March.
On Tuesday, Adani Enterprises, the flagship enterprise for the group, said it was planning to issue new shares through a follow-on offer. While the late-evening regulatory filing did not specify the amount that would be raised, the mop-up is expected to be in the region of $1.8 billion or approximately Rs 14,600 crore.
On Wednesday, Bloomberg reported, citing IFR, that Adani Enterprises and Adani Transmission are both planning follow-on public offers for up to a combined amount of $3.4 billion or Rs 27,500 crore. The issuance could be made early next year.
The issue of fresh shares would also increase the free float of these companies.
While the shares of most group companies have performed exceptionally well in the past six months or so, experts point to the relatively small float compared with that for competing companies.
While the debt levels for the group have gone up over the past couple of years, analysts have noted that the cash flows, too, have grown steadily, bringing down the debt to Ebitda (earnings before interest, tax, depreication and amortisation) ratios. “…the net debt to Ebitda at the group level has come off to around 5 times in FY22 from the levels of over 7.5 times in FY16,” analysts at Credit Suisse wrote in a note in September.
Other analysts have pointed out that the businesses are all backed by good assets that should generate cash flows. Most group companies, except for power, have seen debt levels climb through FY22. The performance of the group companies in Q2FY23 was mixed. Companies like ACC fared poorly with the operating profits falling sharply both sequentially and year-on-year. The group’s other cement player Ambuja Cements also reported poor numbers. Adani Wilmar posted weak operating profits, while Adani Ports and SEZ reported fairly good results.