Adani portfolio: charting a stable course in global infrastructure

By Our Reporter
One of the most striking aspects of Adani Portfolio's financial performance is its credit rating. All entities within the portfolio, numbering over 100, have maintained their credit ratings

Adani Portfolio, India’s rapidly evolving infrastructure conglomerate, has recently revealed an impressive financial performance, highlighting its standing as one of the strongest credit profiles in both the Indian and global infrastructure sectors. This remarkable achievement is underpinned by low leverage ratios and robust credit ratings, setting a new benchmark in the industry.

The portfolio’s net debt to Trailing-Twelve-Month (TTM) EBITDA now stands at 2.5x, marking the lowest ratio in a decade. This indicates a significant reduction in debt relative to earnings, demonstrating prudent financial management and a strong focus on sustainable growth. Moreover, the cash balance reserves have seen a substantial increase, reaching as high as INR 45,895 crore (approximately USD 5.5 billion). This enhancement in liquidity positions the portfolio to effectively manage future investments and obligations.

In terms of asset allocation, there has been a notable shift towards equity investments, which now constitute 59.8% of total gross assets. This move, away from a heavier reliance on debt funding (now at 40.2%), reflects a strategic approach to balance sheet management. The total asset base of the portfolio has grown to an impressive INR 4.48 lakh crore (around USD 54 billion), further solidifying its market position.

Adani Portfolio’s half-yearly credit performance report from its headquarters in Ahmedabad, India, provides a detailed overview of its financial journey. The last six months have seen the portfolio lower its net debt by 3.6% while increasing its cash reserves by 13.7%. This financial prudence has been accompanied by a record half-yearly profit growth of 47% in terms of EBITDA (earnings before interest, tax, depreciation, and amortisation). A notable aspect of this performance is the contractual nature of over 80% of the EBITDA, with 68% rated A+ or higher. This high rating provides a stable and predictable cash flow, enabling long-term investment planning.

The first half of fiscal year 2024 has been particularly fruitful for Adani Portfolio. The EBITDA growth rate has outpaced the increase in debt, resulting in continually improving leverage ratios. This growth is not just a short-term spike but a consistent trend, with EBITDA growing by 47% year-over-year, while net debt decreased. The portfolio’s key leverage ratios, such as Net Debt to EBITDA and Net Debt to Equity, have improved significantly compared to the end of the previous fiscal year.

The portfolio’s liquidity levels are at an all-time high, with cash balances surpassing the long-term debt repayment obligations for the next 18 months. This high level of liquidity is a testament to the portfolio’s robust financial health and its ability to navigate market uncertainties effectively.

Despite the focus on deleveraging and maintaining high cash balances, the portfolio has not shied away from making strategic investments. The total gross assets of the portfolio increased by 6% during the period, primarily driven by higher equity investments. This strategy not only underscores the portfolio’s commitment to growth but also its ability to leverage strong cash flows for sustainable expansion.

One of the most striking aspects of Adani Portfolio’s financial performance is its credit rating. All entities within the portfolio, numbering over 100, have maintained their credit ratings. This is a remarkable achievement, considering the size and diversity of the portfolio. The stability and predictability of the portfolio’s cash flows have been crucial in maintaining these ratings, with a significant portion of the EBITDA being highly rated.

Adani Portfolio’s latest financial results paint a picture of a resilient and strategically focused conglomerate. Its ability to maintain a strong credit profile, coupled with prudent financial management and strategic investments, positions it as a leader in the infrastructure sector, not just in India but on a global scale. The portfolio’s approach to balancing growth with financial stability serves as a model for other companies in the sector, demonstrating that sustainable growth and financial prudence can go hand in hand.

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