Adani Group Targets ₹40,000 Crore from Retail Investors: Strategic Move to Diversify Funding and Hedge Risks

The Adani Group is aiming to raise up to ₹40,000 crore from retail investors over the next three to four years. This move is part of their strategy to diversify their funding sources and manage risk better, according to a report by Moneycontrol on September 5.

Recent Debt Issue

Recently, Adani Enterprises launched a public issue of secured non-convertible debentures (NCDs) worth ₹400 crore. These debt instruments, which have terms of two to five years, offer an annual yield of 9.25-9.90 percent and were fully subscribed on the first day.

Expansion Plans for NCDs

The group plans to issue similar NCDs for other entities within the Adani Group. This strategy aims to reduce their reliance on loans from a limited number of banks and financial institutions, which currently includes both public and private sector banks.

Current Debt and Borrowings

As of March 2024, domestic lenders had a combined exposure of ₹88,100 crore to various Adani Group companies through long-term and working capital loans. Adani Enterprises has seen an increase in its debt for the financial year 2023-24. Long-term borrowings grew to ₹43,718 crore, up from ₹32,590 crore the previous year, a rise of 34.14 percent. Short-term borrowings also increased to ₹4,897 crore, compared to ₹4,244 crore in the previous year. Despite this, the company’s cash reserves improved to ₹8,523 crore from ₹5,539 crore.

Liquidity and Financial Health

The company’s net external debt rose to ₹29,511 crore, up 32.71 percent from ₹22,237 crore the previous year, showing increased leverage but also better liquidity. Raising funds from retail investors will help the group diversify its funding sources and enhance its public image. This move may also attract more retail investors to the group.

Strong Liquidity Position

The Adani Group has previously used foreign debt markets and Indian banks for raising capital. The group’s strong liquidity position is highlighted by its ability to cover more than 30 months of debt payments with its cash reserves. They also reported a 33 percent rise in pre-tax profits for the April to June quarter, driven by growth in their infrastructure business and emerging sectors.