Prices of Adani Group's long-term dollar-denominated bonds are off recent lows on renewed investor optimism - attributed by analysts to geopolitical factors - likely having positive impact on the long-term outlook and any potential risk of a debt default, or refinancing concerns.
Prices of long-dated Adani bonds rose the most on February 14.
Analysts have attributed the rise in Adani bonds to the recent decision by the US administration to halt FCPA proceedings against foreign companies for alleged violation of US anti-bribery laws.
Adani Ports and Special Economic Zone bonds maturing in 2041 saw their prices increase by 200 basis points, while Adani Green bonds maturing in 2042 saw their prices rise by 112 basis points. Several other Adani Group bonds saw their prices rise between 50-60 basis points on February 14.
Consequently, bonds from Adani Group witnessed an decline in their yields, given the inverse relation between bond yields and their prices.
Adani Ports and Special Economic Zone bonds maturing in 2041 saw their yield drop to 6.79 percent from 7.03 percent on February 14, while Adani Green bonds maturing in 2042 saw their yield drop to 7.48 from 7.6 percent. Other Adani Group bonds such as those by Adani Energy Solutions and Adani Electricity Mumbai too saw their yields fall significantly.
Additionally, US President Donald Trump and Prime Minister Modi on February 13 agreed on a series of measures supporting bilateral trade and investment, adding to investor optimism, with a wide section reporting the meeting as successful.
“The recent developments in the US appear to be in favour of the Adani group. The Adani group already has significant plans to invest in the US and we have seen that the Trump administration is more business friendly,” Kranthi Bathini, Director of Equity Strategy at WealthMills Securities said.
Slowdown in Adani Group EBITDA
Despite the improved sentiment for Adani bonds, back home, Q3FY25 earnings of Adani Group companies have signalled a slowdown in the EBITDA growth, a key metric for judging financial performance.
According to data from ACE Equities, major Adani Group companies like flagship Adani Enterprises and Adani Ports and Special Economic Zone witnessed a sharp slowdown in their EBITDA growth during Q3FY25.
After recording an EBITDA growth of 48 percent and 46 percent in first and second quarter of the fiscal, Adani Enterprises reported a flat EBITDA of Rs 3,722.5 crore in Q3FY25, marginally higher than Rs 3,715.98 crore a year ago.
Similarly Adani Ports, which saw its EBITDA grow by 28 percent and 13 percent respectively in Q1 and Q2FY25, reported an EBITDA growth of just 4 percent in Q3FY25.
Other Adani Group companies fared even worse. Adani Total Gas reported a 9.6 percent drop in EBITDA in Q3FY25 after reporting operating profit growth of 19.75 percent and 8 percent in the previous two quarters of the fiscal.
Adani Green Energy, on the other hand, saw its EBITDA decline by 8 percent in the third quarter, after reporting double-digit EBITDA growth of 17 percent and 22 percent respectively, in the first two quarters of the fiscal.
The group’s overall EBITDA for Q3FY25 saw a growth of 16 percent, driven by sharp increase in operating profit of its cement businesses Ambuja Cement and ACC, and thermal power business Adani Power, even as other major businesses pulled down the operating performance.
For the nine-month period ending December 31, Adani group’s overall EBITDA grew by 7 percent to Rs 71,142 crore, data showed.
The slowdown in EBITDA of major Adani Group companies comes as with around $1.8 billion in offshore debt refinancing coming up this year, in addition to major capex spending.
Rating agency India Ratings, in a November 2024 report noted that Adani Green is more exposed to near-term refinancing needs, compared to other Adani entities.
“The near-term refinancing risk appears to be manageable in other group entities rated by India Ratings, given the low leverage and adequate cash flow buffers to meet upcoming debt maturities,” India Ratings said.
Moneycontrol reported on February 13 that Adani Green is in advanced talks with an SBI-led consortium to raise up to Rs 10,000 crore to refinance foreign currency loans worth $1.1 billion.
Other Adani group businesses that have upcoming refinancing needs include Adani Energy Solutions, which has a refinancing requirement of $185 million in October 2024, as per India Ratings.
The rating agency further said that Adani Airports Holdings - a subsidiary of Adani Enterprises - has external commercial borrowings worth $400 million due for repayment in June 2025, and borrowings of $150 million due in September this year.
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