Adani Portfolio’s Credit Profile Strongest Among Indian, Global Infrastructure Sector
Adani Portfolio, India’s fastest growing and highest-rated infrastructure portfolio, today released its half-yearly credit performance.
Adani Portfolio, India’s fastest growing and highest-rated infrastructure portfolio, today released its half-yearly credit performance. In the last six months, it has lowered net debt by 3.6% and raised cash reserves by 13.7%, all while delivering an all-time high half yearly profit (EBITDA – earnings before interest tax and depreciation) growth of 47%. Notably, over 80% of the EBITDA is contractual and 68% of EBITDA is A+ rated, thus providing the highest level of stability and multi-decadal cashflow visibility. These strong cashflows have allowed unconstrained investments as reflected by the increase in asset base to INR 4.48 lakh crore (USD 54 billion). Equity deployment is at 59.8% of the total asset base, much higher than industry standards. Adani Portfolio is committed to building a world-class infrastructure and utility platform.
Credit Highlights for H1 FY24
In the first half of fiscal year 2024, the Adani Portfolio of companies demonstrated a robust financial performance while further enhancing its strong credit profile.
Growth with Credit Discipline
The portfolio EBITDA has been growing at a much faster rate than debt, resulting in consistently improving leverage ratios. This trend has only accelerated in the last six months with EBITDA growth of 47% YoY, while net debt declined by 3.6%.
Key Leverage Ratios at the end of H1 FY24 versus at the end of FY23:
- Net Debt to EBITDA (TTM) at 2.5x as against 3.3x
- Net Debt to RR EBITDA (TTM) at 2.5x against 2.8x
- Net Debt to Equity at 0.67x as against 0.8x in the end of FY23
- Debt coverage ratio improved to 2.12x against 2.02x
- Gross Assets to Net Debt increased to 2.5x against 2.3x
(Note: For calculations of above ratios and to make it comparable with previous periods, EBITDA considered is for the trailing-twelve months)
High levels of Liquidity
The cash balance across portfolio companies is the highest ever at Rs 45,895 crore (USD 5.5 billion), up 14% than six months ago, and exceeds long-term debt repayment for the next 18 months.
Gross Assets increase supported by higher equity investment
Despite ongoing deleveraging and higher cash balances, the Portfolio companies have maintained their commitment to investment as reflected by the increase in the asset base. Total Gross Assets of the portfolio increased by 6% or INR 25,240 crore (USD 3 billion) during the period, reaching INR 4.48 lakh crore (USD 54 billion), thanks to higher equity investments supported by strong cashflows from the businesses.
Equity investment in gross assets is as high as 59.8% while debt investment is at 40.2%. This is primarily due to higher cashflows from the Portfolio businesses, which allowed prioritizing equity over debt.
No maturity outside of FFO and cash envelop
Existing Fund Flows from Operations at Portfolio level exceed debt maturity for each of the next 10 years. This Fund Flow from operations is EBITDA less finance cost less tax paid (FFO = EBITDA – finance cost – tax paid).
One of the highest rated portfolios
Thanks to such a stable credit profile, ratings of all entities (more than 100) in the portfolio companies have remained intact. 53% of portfolio EBITDA is AA+ and another 15% of the total EBITDA is A+.
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