Exposure of banks to overall Adani Group debt has reduced materially: CLSA

A CLSA report states that the banks are now funding 35-40% of Adani Group debt with private banks funding less than 10% and PSU banks at 25-30%.

The exposure level of banks in the overall debt of the Adani Group has reduced materially. Banks have lent Rs 150 billion or just 15% of the Rs 1 trillion that the group has borrowed over the past three years, according to analysts at CLSA.

Private banks' share in overall Adani Group debt has plunged from 31% to 8% while that of the PSU banks has dropped from 55% in FY16 to 26% now.

"The group has indicated that the share of PSU banks in its funding mix has dropped from 55% in FY16 to 26% now while the share of private banks has plunged from 31% to 8%. A greater part of the group’s funding now comes from bonds at 37% (funding ports and the transmission business) and from foreign banks (18% of debt)," the CLSA report said.

The report states that the banks are now funding 35-40% of Adani Group debt with private banks funding less than 10% and PSU banks at 25-30%.

The report further adds that the banking exposure to the Adani Group is 0.55% of system loans. The PSU banks' share is 0.7% of their loans while that of private banks stands at 0.3% of their loans.

"For private banks, our feedback suggests that they have potentially reduced their exposure on aggregate and the residual debt to the group is largely in very strong cashflow businesses, such as power and airports," the CLSA analysts said.

"For PSU banks, the exposure is more meaningful at 0.6% of loans and 5% of FY24 networth. PSU banks have also indicated that their exposure has not meaningfully increased in the past two to three years since the group has expanded into new businesses. Also, most of the recent acquisitions have been financing by foreign entities," they added.