Adani Group is on better financial footing now than during Hindenburg attack, says Bernstein

PTI New Delhi: Ports to energy Adani group is better off financially now than at the time when it was under attack from short-seller Hindenburg, US-based research firm Bernstein said citing dramatic drop in shares pledged by promoters and low leverage. The last big event for the group was in January 2023 when Hindenburg accused it of accounting and financial fraud, and the latest one happened on November 21 when US authorities filed an indictment against the founder chairman of the conglomerate Gautam Adani and key aides in a bribery related case. Adani Group had repeatedly denied all charges in the Hindenburg report as well as the ones brought by the US authorities last month.

Bernstein in a report said it is presenting a topdown view on how the groups leverage, sharepledges, debt-repayment and relative valuations have evolved in the last two years to assess whether the risks are lower than earlier. The group is now in a much stronger position with no sharepledges, low leverage, debt repayments and improved valuations. A key concern during the short-seller event last year was the share pledge of the group-across assets. The fear was that the group has pledged these shares to raise money whi ch has been invested as equity in new businesses, hence a tight liquidity environment for the group could lead to a domino effect. "If we look at the evolution of share pledges for the group, there has been a dramatic drop across companies this is one area where the group has taken significant action over the last 1.5 year," Bernstein said.

For example, the share pledge in Adani Power has dropped from 25 per cent to 1 per cent, and in Adani Ports, it has fallen from 17 per cent to zero. Promoter holding has also increased across the group, except in Adani Energy Solutions, which is due to a recent Qualified Institutional Placement (QIP). Additionally, the group's overall debt has decreased following the short-seller event, falling from Rs 2.41 lakh crore in March 2023 to Rs 2.38 lakh crore in September 2023.

Although the debt has risen slightly since then, profits have grown even more, reducing the group's leverage from 3.8x before the Hindenburg incident to less than 2.5x now, it said. On debt, it said, Adani group has diversified their funding sources over the years - reducing reliance on domestic banks (both public and private) and raising money from bonds and international markets. "The share of banks has reduced from 86 per cent in FY16 to just 15 per cent in FY24 and the share of bonds has increased from 14 per cent in FY16 to 31 per cent in FY24.