Adani's debt: How much does it owe to Indian banks and is it cautious?

 

Global brokerage firm CSLA has said in its report that bank funds account for less than 40 per cent of the Adani group's total exposure, while Jefferies said the exposure of Indian banks to the Adani group is within manageable limits.

According to reports by brokerages Jeffries and CSLA, Adani Group's debt does not pose a risk to Indian banks. Global brokerage firm CSLA has said in its report that the bank's total debt on Adani Group is less than 40 per cent. It said that bond financial institutions and foreign banks form a large part of it. Whereas, Jefferies said that the exposure of Indian banks to the Adani group is within 'manageable limits'.

This comes at a time when the Adani group is under fire as US short-seller Hindenburg Research said it held short positions in the Gautam Adani-led company, alleging improper use of offshore tax havens. imposed and expressed concern about the high debt which sent the group's shares soaring. to crash.

CSLA said the Adani Group's debt level doubled from ₹1 lakh crore to ₹2 lakh crore in the last three years, while total bank credit increased by over 25 per cent. The exposure of Indian banks to loans is less than 40 per cent and that of private banks is less than 10 per cent.

“Indian banking exposure is less than 40 per cent of the total group loans. Within this, the exposure of private banks is less than 10 per cent of the total group exposure and most banks (including ICICI/Axis) have indicated that they are largely funding strong cash flow assets such as airports/ports."

PSU banks have physical exposure (30 per cent of group loans), but this loan has not increased in the last three years. CLSA said most of the incremental funding to the group for new businesses and acquisitions came through foreign sources.

CLSA said, "The ballpark exposure of private banks is 0.3 per cent of FY24 loans and 1.5 per cent of FY24 net worth. The exposure for PSU banks is 0.7 per cent of FY24 loans and FY24 net worth." 6 per cent of.

CLSA said the share of bank credit in the overall group credit has reduced materially and incrementally banks have lent only ₹15000 crore, or 15 per cent of the ₹1 lakh crore the group companies have disbursed in the last three years. Borrowed.

Large acquisitions, such as those of cement firms ACC and Ambuja, have been funded entirely by foreign banks.

Global brokerage Jefferies said the exposure of Indian banks to the Adani group is within manageable limits.

“Following the recent concerns, Adani Group has shared details of debit and leverage levels. Consolidated debt stands at ₹1.6 tn (ex shareholder sub-debt) and debt/Ebitda has declined from 4.3x in FY16 to 3.2x in FY22. Acquisition of cement business can add. Debt of ₹600 billion, but cashflow also increased. Diversification of the lending-mix has brought down the share of Indian banks to 33% of loans and 0.5% of loans to the sector; Balance with Bonds/Foreign Banks. We look for progress, but see a downside risk for banks," the note said.

Adani's group loans account for 0.5 per cent of the total loans in the Indian banking sector. Loans to public sector banks (PSUs) account for 0.7 per cent of total loans and for private banks it is 0.3 per cent.

"Adani Group has consolidated gross debt of ₹1.9 trillion and net debt of ₹1.6 trillion, spread across group companies. Top-3 companies by net debt level are Adani Green Energy (AGEL), Adani Power ( APL) and Adani Ports and SEZ (APSEZ) each with ₹300-400 bn net debt. We understand with acquisition of cement business of ₹600 bn (including preferential allotment of ₹200bn), but this company will also generate reasonable cashflow Over FY16-22, we estimate the net debt level to increase from ₹0.7 trillion to ₹1.6 trillion, reflecting capex across group companies," the note highlighted.