Gautam Adani-led Adani Group has received an upgrade by Jefferies as the conglomerate’s 10 listed firms saw a 55% rise in profit for the fiscal year ending March 2024.© Provided by The New Indian Express
Adani Group Sees Significant Profit Boost, Eyes $90 Billion Expansion
NEW DELHI: The Gautam Adani-led Adani Group has received a significant upgrade from Jefferies, as the conglomerate’s ten listed firms witnessed a remarkable 55% rise in profit for the fiscal year ending March 2024. This development marks a robust recovery from the setbacks caused by the Hindenburg Research report, propelling the group back into expansion mode with an ambitious $90 billion capex plan over the next decade.
Remarkable Financial Growth Across Adani Group Companies
During FY24, the Adani Group’s EBITDA for its listed companies grew by an impressive 40% year-on-year to Rs 66,000 crore. This growth was driven by several key factors, including a substantial increase in Adani Power’s EBITDA due to capacity additions, higher volumes, merchant contributions, and lower imported coal prices. Other group companies also showed strong EBITDA growth, ranging from 16% to 33%, except for Adani Wilmar, which experienced a year-on-year decline.
The Jefferies report highlighted that Adani Enterprises achieved a 29% year-on-year EBITDA growth, primarily fueled by new incubating businesses such as ANIL/solar and airports, as well as the IRM trading business. Adani Cement (Ambuja) saw an EBITDA boost due to an uptick in unit EBITDA, while Adani Ports’ growth was driven by a 24% increase in volume. Adani Green reported a 33% EBITDA growth, attributed to a 2.8GW capacity addition and a 100 basis point increase in capacity utilization factor (CUF). Meanwhile, Adani Energy’s 16% EBITDA growth was linked to new line additions, and Adani Total Gas experienced a 27% year-on-year growth, driven by a 15% increase in volume and gross margin expansion aided by lower gas costs. Adani Wilmar’s EBITDA fell due to inventory losses stemming from a dip in oil prices and misalignment of hedges.
Leverage Ratio Improvement and Debt Management
Jefferies also noted a significant improvement in the Adani Group’s leverage ratio, which reached a multi-year low. Historically, the group’s high debt levels have been a point of concern. However, in FY24, the net debt at the group level (including debt related to the cement business acquisition) remained stable at Rs 2.2 lakh crore, compared to Rs 2.3 lakh crore the previous year. The net debt/EBITDA ratio improved markedly to 3.3 times FY24 EBITDA, down from 5 times the previous year.
This improvement in financial metrics reflects the group’s strategic efforts to stabilize its debt levels while continuing to pursue aggressive expansion plans. The reduction in leverage and the substantial EBITDA growth across its portfolio highlight the Adani Group’s resilience and ability to rebound from financial and reputational challenges.
Future Outlook and Expansion Plans
Looking ahead, the Adani Group is set to embark on an ambitious expansion journey, with a planned capital expenditure of $90 billion over the next decade. This expansion is expected to further strengthen the group’s position in various sectors, including power, infrastructure, and green energy.
The group’s recovery and growth trajectory underscore its strategic vision and commitment to maintaining a leading position in the global market. As the Adani Group continues to navigate its expansion plans, stakeholders and investors will be closely watching its financial performance and operational developments.
In conclusion, the Adani Group’s impressive financial turnaround and ambitious future plans signal a strong recovery from past setbacks and a promising path forward. With significant growth in EBITDA across its companies and a strategic focus on expansion, the conglomerate is poised to achieve new heights in the coming years.
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