7 highlights
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The Adani Group has been racking up debt and turning to the bond markets in a significant way to fund its operations and expansion plans.
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The massive debt raise since January 2020 also comes on the back of a considerable liquidity push by the Reserve Bank of India (RBI).
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Group chairman Gautam Adani has built a formidable infrastructure empire over the last three decades and is now making a $20 billion play in the renewable energy space. He also recently announced a foray into setting up data centres, a media business, retail stores for his edible oil arm and is also working on a digital omni-channel retail platform for the consumer businesses.
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Clearly, Adani wants to hold on to the shares in his companies to give him more flexibility to raise debt by pledging them.
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In fact, the Adani Group’s level of indebtedness is actually lower than that of its major rivals: Reliance Industries Ltd (RIL) and Tata Sons.
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So, for the time being, Adani’s house of debt is relatively safe, only solidifying the group’s dominance of the Indian capital markets.
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Since these are risks and headwinds that could come up in the future, the rating agencies have not taken a call on the group’s creditworthiness despite the significant rise in indebtedness. The agencies are also comforted by the fact that the group has a strong equity capital base and significant stake held by the promoters, which means that if push comes to shove, the main entities can always step in to help service debt repayments.