Gautam Adani: Gautam Adani changed track due to Hindenburg shock, preparing to win the hearts of investors and creditors – gautam adani to reduce debt and boost income to woo investors and creditors
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According to a Mint report, Adani Group has a debt of Rs 2.27 lakh crore. In a recent meeting with creditors, Adani Group officials presented a detailed road map on how to bring down the leverage ratio. The group aims to bring down its leverage ratio to 3.1x by the end of this financial year from 4.2x at present. The leverage ratio is a financial ratio that compares a company’s debt to other financial metrics. Instead of reducing debt, Adani Group’s emphasis is on reducing the leverage ratio. The leverage ratio helps in assessing the credit risk of the firm.
There will be a decrease in the leverage ratio
In the report of Hindenburg Research on January 24, it was said that the leverage ratio of Adani Group is very high. A high leverage ratio means that the company has borrowed more than its current cash flows. The report caused Adani Group shares to fall for more than a month. This is the reason why Adani Group has made a comprehensive plan to win the trust of creditors and investors. A source said the total debt of the group could be reduced by 5 to 10 per cent by the end of this year. Instead, the group’s focus is on increasing EBITDA by 20 to 22 per cent. This will reduce the leverage ratio.
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Along with this, the group is also working on increasing efficiency in its eight core businesses. The group’s debt-to-EBITDA ratio was 7.6x in 2013, which has come down to 3.2x by March 2022. But it increased to 4.2 percent in the financial year 2022-23. The group’s debt as on 31 March 2023 was Rs 2.27 lakh crore. Out of this, 39% is in the form of bonds, 29% of international banks, 32% of domestic banks and NBFCs. The group believes that its Ebitda can grow by 20 percent. The debt-earnings ratio will come down due to increase in revenue.
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