The operational risks in Adani Group have reduced over the years, with a fall in share pledges, and improving leverage among others, according to Bernstein Research.
The key concern during the short-seller Hindenburg Research’s allegations was share pledge, which has seen a “dramatic drop” across companies, Bernstein said in a note on Dec. 2. “This is one area where the group has taken significant action over the last 1.5 years.”
Share pledge in Adani Power reduced from 25% to 1% and in Adani Ports it fell from 17% to nil, the brokerage said. Promoter holding is also up across the group, especially Ambuja Cements Ltd., where promoter holding increased from 63% to 68% due to the warrants.
Bernstein also noted that overall debt for the group decreased post the short seller event. The net debt to Ebitda of the group has “fallen sharply” with a rise in Ebitda, as assets got operational across the group and improved profitability. Over the years, the ports-to-power conglomerate has shifted away from banks to bonds, it noted.
“The debt repayment schedule is more balanced,” Bernstein said. “Considering the company is sitting on Rs 5,900 crore of cash, it seems lesser of a concern this time,” it said. Bernstein, however, covers only Adani Ports and Special Economic Zone Ltd., Adani Green Energy Ltd. and Ambuja Cements Ltd.
The Adani Group has firmly rejected allegations made by the US authorities and later said that Founder Gautam Adani, Adani Green Energy Executive Director Sagar Adani, and Managing Director and Chief Executive Officer Vneet Jaain have not been named in the bribery charges. Adani Ports continues to trade below JSW Infrastructure Ltd. and Container Corp., while Ambuja Cements trades broadly in line with large cement names, Bernstein said.