Introduction: Shares of Adani group companies are expected to gain traction in Monday's trade as the conglomerate, led by Gautam Adani, announces its ambitious goal of achieving Rs 90,000 crore in EBITDA (earnings before interest, taxes, depreciation, and amortization) within the next two to three years. This announcement follows a period of scrutiny after a critical report from US-based short seller Hindenburg Research and subsequent investigations by US authorities. The Adani group plans to sustainably grow across its diversified business portfolio, targeting over 20% annual growth in consolidated EBITDA.
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Adani Group's Strong EBITDA Growth Prospects:
The Adani group anticipates a robust annual growth rate of more than 20% in consolidated EBITDA across its various businesses in the coming years. This projection comes on the heels of a significant year-on-year increase in the group's listed portfolio EBITDA, which surged by 36% to reach Rs 57,219 crore in FY23. The core infrastructure segment, encompassing energy, transport, logistics, and flagship company Adani Enterprise Ltd's infrastructure ventures, witnessed a 23% YoY growth in EBITDA to Rs 47,386 crore.
Diverse Business Range and Assured Cash Flows:
With approximately 83% of its EBITDA derived from core infrastructure businesses, the Adani Group's portfolio spans utility and infrastructure sectors, offering consistent and guaranteed cash flows. The conglomerate's growth aspirations extend to diverse sectors, including airports, renewables, solar panels, ports, power, cement, and transmission.
Positive Financial Performance and Debt Management:
Adani's portfolio experienced impressive growth of 36% in the previous year, accompanied by an improvement in its net debt to EBITDA ratio. In FY23, the portfolio's combined net debt to EBITDA ratio improved to 3.27 times from 3.8 times in FY22. Additionally, the net debt to run-rate EBITDA ratio improved to 2.8 times in FY22 from 3.2 times in FY23, demonstrating the group's strong financial discipline amid robust growth.
Solid Financial Position and Reduced Refinancing Risks:
The Adani group management assures stakeholders that there are no significant debt maturities in the near future, indicating minimal refinancing risks or immediate liquidity requirements. The gross assets' net asset value stands at Rs 3,91,000 crore. Over time, the group has diversified its long-term debt portfolio, reducing its reliance on banks and expanding its funding sources. The current debt is distributed among bonds (39%), global international banks (29%), PSU and private banks, and NBFCs (32%).
Conclusion:
The Adani group's announcement of its ambitious EBITDA target and sustained growth plans across its diverse business sectors is expected to generate considerable interest in the shares of its associated companies. With a track record of strong financial performance, improved debt ratios, and a solid financial position, the conglomerate aims to capitalize on its core infrastructure businesses while expanding into new sectors, signaling its commitment to sustainable growth.
