The Adani Group is a diversified Indian multinational conglomerate with interests spanning infrastructure, energy, logistics, and agribusiness. The group has grown into one of India’s largest corporate houses. Its operations include ports, renewable energy, power generation, coal mining, gas distribution, and airports, showcasing its critical role in India’s economic development.
The group is a global leader in renewable energy, aiming for sustainability and carbon neutrality. With flagship companies like Adani Enterprises, Adani Green Energy, and Adani Ports, the group plays a pivotal role in shaping India’s infrastructure landscape. Known for its rapid expansion and innovation, Adani continues to explore new opportunities while contributing to national and global progress.
Recent Charges Against Gautam Adani
The United States has charged billionaire businessman Gautam Adani with a $265 million alleged bribery and fraud conspiracy. Adani, his nephew Sagar Adani, and six other defendants were accused by US prosecutors of bribing Indian government officials to get contracts for solar energy supply that resulted in $2 billion in profits over 20 years.
The US Securities and Exchange Commission (SEC) in New York has indicted Adani and others on charges of breaching the Foreign Corrupt Practices Act (FCPA). The US District Court for the Eastern District of New York received a complaint.
Debt Structure of Adani Group
According to data, domestic banks and non-banking financial corporations (NBFCs) increased their exposure to the Adani Group by almost 500 basis points between 2023 and 2024, and currently makeup approximately 36% of the group’s overall debt composition. The Indian conglomerate’s debt increased as a result of capital expenditures in certain areas of its operations.
Additionally, the group’s domestic capital market debt increased from 11,562 crore in the previous fiscal year to 12,404 crore by March 2024. In contrast, debt from global banks decreased slightly to 63,296 crore at the end of March from 63,781 crore in the same period last year, while debt from global capital markets decreased to 69,019 crore from 72,794 crore.
Even while the group’s debt increased 6% year over year in FY24, a much larger increase in operating profit over the same time period allowed the firm to reduce the net debt-to-operating profit ratio to its lowest level in at least six years, from 3.27 times to 2.19 times as of the end of March.
Banks which have the Highest Exposure
Several prominent banks, including State Bank of India, Bank of Baroda, Union Bank of India, Canara Bank, HDFC Bank, Axis Bank, and ICICI Bank, have significantly increased their lending to the Adani Group. This reflects growing confidence in the group’s diverse ventures across infrastructure, energy, and logistics, supporting its rapid expansion and contribution to India’s economic growth. However, with the recent allegations investors must be aware before investing in any of the banking stocks, especially one should invest only after considering the loan book of the banks.
Conclusion
The Adani Group’s rapid expansion and diversification across critical sectors have attracted increased lending from leading Indian banks, showcasing their confidence in the conglomerate’s growth potential. However, the group’s rising debt levels and recent allegations highlight the importance of evaluating associated risks. Investors should remain cautious, considering the financial health and exposure of banks to the Adani Group before making informed investment decisions. This balance of opportunity and caution reflects the dynamic nature of India’s corporate and financial landscape.
Written By: Dipangshu Kundu
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