Adani Group aims to raise Rs 40,000 crore from retail, HNI investors in 3 years via NCDs

Adani Group aims to raise Rs 40,000 crore from retail, HNI investors in 3 years via NCDs

Adani Group plans to raise between Rs 30,000 and Rs 40,000 crore from retail investors over the next 3-4 years to diversify sources of funds and mitigate risk, according to people familiar with the group’s discussions.

On Wednesday, group flagship Adani Enterprises Ltd launched its maiden public issue of secured non-convertible debentures (NCDs) worth Rs 400 crore. The NCDs, with tenors ranging from two to five years, offered an effective annual yield of 9.25 percent to 9.90 percent and were fully subscribed on the first day.

“The group plans to launch similar public issues (NCDs) for other group entities,” one of the people cited said, requesting anonymity. “This will help reduce the group’s concentration of rupee loans from a limited set of lenders, which currently includes public and private sector banks,” the person added. According to the group’s latest corporate filings, domestic lenders, including banks and financial institutions, had an exposure of Rs 88,100 crore to various Adani Group entities through long-term and working capital loans as of March 31, 2024.

Adani Enterprises, which acts as an incubator for many of the group’s new businesses, has seen its debt increase in FY24. According to its latest investor presentation, long-term borrowings rose from Rs 32,590 crore in FY23 to Rs 43,718 crore in FY24, while short-term borrowings increased from Rs 4,244 crore to Rs 4,897 crore. Total debt grew from Rs 38,320 crore in FY23 to Rs 50,124 crore in FY24. Meanwhile, the company’s cash and cash equivalents, including cash, bank balances, and current investments, improved from Rs 5,539 crore to Rs 8,523 crore.

Consequently, Adani Enterprises’ net external debt stood at Rs 29,511 crore in FY24, up from Rs 22,237 crore in FY23, reflecting increased leverage along with improved liquidity.

An email sent to an Adani Group spokesperson on the group’s fundraising plans remained unanswered until publishing time on Thursday.

“Raising money from retail investors augurs well from a diversification perspective and will boost overall goodwill and public awareness of the group. This may also have a spillover effect on the group’s equity base by attracting more retail investors,” the person cited said. The group has traditionally tapped foreign debt markets to raise capital while raising rupee loans from domestic banks.

In recent investor presentations, group founder Gautam Adani’s conglomerate emphasised its strong liquidity position, stating that it has sufficient cash reserves to cover over 30 months of debt payments. The group’s businesses continue to perform robustly across sectors. By the end of June, the group’s cash balance accounted for 24.8 percent of its gross debt of Rs 2.41 lakh crore, up from 17.7 percent a year earlier. “24.77 percent of gross debt is in the form of cash balances, providing liquidity cover for 30 months of debt servicing,” the group stated.

The conglomerate also reported a 33 percent surge in pre-tax profit for the June quarter, driven by strong performance from its core infrastructure businesses and growth in emerging sectors like solar and wind manufacturing, as well as airports.

Rating agency ICRA forecasts that incremental credit flow in the Indian economy from domestic sources will moderate to Rs 24.5 lakh crore in FY25 compared to the previous year. However, bond issuances are expected to rise as the domestic debt capital market remains an attractive source of borrowing for large corporates.