Ahmedabad, June 21: The Adani Group is set to invest USD 100 billion in energy transition and digital infrastructure in the next decade.
According to the Jefferies Group, a leading American multinational investment bank, and financial services company, which hosted the Adani Group companies for an investor meeting in Ahmedabad, the conglomerate’s management has outlined a strong FY24 operating performance, a 27 percent five-year CAGR, and an improved leverage profile across businesses.
The group is eyeing USD100 billion of capex over the next decade towards energy transition and digital infra and views its leverage position as strong enough for the next leg of growth, it said.
The Adanis also hopes to capitalize on the large consumer base with Adani’s Infra platform businesses. It is scaling up capacities across businesses, with major outlays on energy transition projects and manufacturing capabilities for green energy components.
The group’s EBITDA grew 40%+ YoY in FY24. The management highlighted that the Adani portfolio achieved around USD10 billion EBITDA (including OI) in FY24, growing 40%+ YoY. More than 80% of EBITDA came from infra-related businesses.
The management informed about a high Cash after Tax (FFO) to EBITDA ratio for the businesses, with FFO enough to envelop all debt maturities. Leverage is in its best position in many years.
According to the company, contracted EBITDA is 80% of total group EBITDA and cash reserves stand at 20%+ of borrowing, helping address the group’s cash flow and system risk.
The Adanis do not see a refinancing risk at the group level, and effective capital management planning has been reflected in rate profile stability, with increasing duration, despite rate and FX volatility.
The group believes that, with its national footprint, it has established multiple touchpoints with Indian consumers. It also expects a demographic dividend to show up, with the consumer base on Adani’s core infra platform already clocking 350 million users. The group will look to capitalize on this in the medium term.
The management of the flagship, Adani Enterprises, highlighted the gradual rollout of the GH2 ecosystem, the group’s most capex-heavy venture. The airports business should benefit from growth in traffic and non-aero trends. The company aims to bid for new airports under India’s airport privatization plan. A copper project was recently commissioned and work on the coal to PVC project has begun. The company does not see net debt/EBITDA crossing nearly five times capex.
Adani Cement reiterated that capex timelines (140 MTPA by FY28) are on track and the company continues to guide for nearly Rs1,500 EBITDA/T. The firm is looking at reaching a cost of production of Rs 3650/T by FY28 (Rs500/T+ lower than the current), which would be the best in class globally. It plans to consolidate all its cement companies under one head in the medium term and is working to identify the best structure.
Adani Energy Solutions (AESL) aims to commission Rs170 billion under-construction transmission assets by FY26E. The management indicated a Rs1.1 trillion TBCB bid pipeline in 12-15 months, where AESL has a 16% market share.
The Mumbai distribution (AEML) posted a 64bps YoY improvement in distribution losses in FY24 on high collection efficiency and loss reduction measures. The company is focusing on increasing the RE mix to manage tariffs. Smart metering remains an exciting opportunity; AESL is executing projects worth Rs 270 billion.
Adani Green had an installed capacity of 10.9 GW in March 2024, with another 11 GW projects under execution. The management guides for 6-8 GW per year of capacity addition in FY25E and FY26E and reiterated their stance of raising capacity to 50 GW by FY30, including 5GW pumped Hydro project.
The company is developing 30 GW RE projects in Khavda in Kutch district (2 GW commissioned) targeted by 2029. Land acquisition/transmission connectivity is largely in place for its RE plans.
(VP)