Bernstein Report: Adani Group in Stronger Position Post-Hindenburg Crisis
The Adani Group has emerged in a much stronger financial position compared to its status during the Hindenburg crisis of January 2023, according to a report by Bernstein, a prominent US-based financial research firm. Despite some ongoing concerns related to US developments, the group has made substantial strides in four key areas: share pledges, leverage, debt repayment, and valuations.
One of the primary issues during the Hindenburg short-seller attack was the group’s high level of share pledges. However, the report highlights that Adani has significantly reduced its share pledge exposure in the past 1.5 years. For instance, the share pledge in Adani Power has decreased from 25% to just 1%, while in Adani Ports, it has been eliminated entirely, falling from 17% to zero. Furthermore, promoter holdings across the group have generally increased, except for Adani Energy Solutions, which saw a reduction due to a recent Qualified Institutional Placement (QIP).
In terms of overall debt, the Adani Group has made notable improvements. Following the short-seller attack, the group’s debt decreased from ₹2.41 lakh crore in March 2023 to ₹2.39 lakh crore by September 2023. Though the debt has seen a slight rise since then, profits have grown significantly, reducing the group’s leverage ratio from 3.8 times before the Hindenburg incident to under 2.5 times now.
Debt repayment is another area where the group has shown positive progress. Adani Green, in particular, had a significant portion of its debt maturing in 2024, including a complex $750 million Holdco bond. However, the company’s repayment schedule has become more balanced, with only ₹8,900 crore in credit facilities maturing in 2023. By the end of September 2023, Adani Green already had ₹5,900 crore in cash, with strong cash flows expected to increase this figure, making refinancing easier.
Lastly, Bernstein has expressed a positive outlook on Adani Ports, noting that it is currently undervalued compared to its smaller peers, such as JSW Infra and Concor, and expects the stock to perform well moving forward.
Overall, Bernstein’s report underscores the Adani Group’s efforts to stabilize and strengthen its financial position, with significant improvements in debt management and corporate governance.
