Adani Group Deeply Overleveraged: CreditSights
The CreditSights, a Fitch Group unit, in its recent report assessed that Richest Indian Gautam Adani's ports-to-power-to-cement conglomerate is "deeply overleveraged" with the group predominantly using debt to invest aggressively across existing as well as new businesses. Starting out as a commodities trader in the late 1980s, the Adani group has diversified from mines, ports and power plants into airports, data centres and defence. Recently, it forayed into the cement sector with a $10.5 billion acquisition of Holcim's India units as well as into alumina manufacturing. Most of this expansion has been funded by debt. As per the report, over the past few years, the Adani Group has pursued an aggressive expansion plan that has pressurised its credit metrics and cash flows. It further states that the Group is increasingly venturing into new and/or unrelated businesses, which are highly capital intensive and raises concerns regarding spreading execution oversight too thin. While there is evidence of promoter equity capital injection into group companies, the Adani Group is exposed to moderate levels of governance and environmental, social, and governance (ESG) risks.
The Adani Group has a strong track record of churning out strong and stable companies through its Adani Enterprises arm, and boasts a portfolio of stable infrastructure assets tied to the healthy functioning of the Indian economy. The Group is the third largest conglomerate in India, after Reliance Industries and the Tata Group. It has a total market capitalisation of over $200 billion.
