CreditSights - Adani Group - 23 August 2022

8/23/22, 11:25 AM CreditSights - Adani Group: Deeply Overleveraged
Adani Group: Deeply Overleveraged

23 Aug 2022, 10:27 AM
Executive Summary
We conducted a fundamental analysis of the large Indian conglomerate, the Adani Group.
Over the past few years, the Adani Group has pursued an aggressive expansion plan that has
pressurized its credit metrics and cash flows.
The Adani Group is increasingly venturing into new and/or unrelated businesses, which are highly
capital intensive and raises concerns regarding spreading execution oversight too thin.
We see little evidence of promoter equity capital injections into the group companies, which we feel is
needed to reduce leverage in their stretched balance sheets.
Potential strong competition between the Adani Group and Reliance Industries to achieve market
dominance could lead to imprudent financial decisions being made.
The Adani Group is also exposed to moderate levels of governance and ESG risks.
In the Adani Group's favor, we take comfort in its solid banking relationships with both domestic and
international banks, which have been willing to lend the group large amounts for both its existing
businesses and new ventures.
The Adani Group has a strong track record of churning out strong and stable companies through its
Adani Enterprises arm, and boasts a portfolio of stable infrastructure assets tied to the healthy
functioning of the Indian economy.
We also believe there are policy tailwinds supporting the development of such infrastructure assets,
and note that founder Gautam Adani enjoys a strong relationship with the ruling Modi administration.
Overall, we remain cautiously watchful of the Group’s growing expansion appetite, which is largely
debt-funded.
We retain our existing Market perform recommendations on the two Adani entities under our coverage,
Adani Green Energy (AGEL) and Adani Ports and Special Economic Zone (APSEZ).
Relative Value
Adani Group: Among the Widest in South & South-East Asia Investment Grade
NOT FOR REPRODUCTION OR DISTRIBUTION

https://www.creditsights.com/articles/465319?s=1271789&a=329585992&n=202479&ch=362 1/16

The Adani Group has 6 listed entities on the Indian stock exchanges, and a few of its group entities have $ bonds
outstanding (as seen in the bond box below). In general, the Group has been investing aggressively across both
existing and new businesses, predominantly funded with debt, resulting in elevated leverage and solvency
ratios. This has understandably caused concerns about the Group as a whole, and what implications it could
have on the group companies that are bond issuers. In the worst-case scenario, overly ambitious debt-funded
growth plans could eventually spiral into a massive debt trap, and possibly culminate into a distressed situation
or default of one or more group companies. Overall, we remain cautiously watchful of the Group’s growing
expansion appetite, which is largely debt-funded.
We currently have two Adani credits under our coverage, namely Adani Green Energy (AGEL) and Adani Ports &
SEZ, on both of which we have Market perform recommendations, inculcating both fundamental and relative
value aspects (see AGEL FY22: FCFs Sink as Higher Capex Kicks In and APSEZ: Wins $1.2 bn Bid For Israeli
Haifa Port). As we have looked deeper into the Group, its corporate structure, the credit risks and mitigants
faced by the Group, we are not changing our recommendations on the 2 credits under our coverage on the back
of this note. If the Group were to face any issues on a broader scale, or if either APSEZ or AGEL were to see
continued increases in their leverage ratios/liquidity issues in the future, we may consider revising our
stance/recommendations on the respective credits. Currently, we do not have coverage and recommendations
on Adani Electricity Mumbai and Adani Transmission, the other two $ bond issuers within the Group.

The Adani Group is the third largest conglomerate (after Reliance Industries and the Tata Group) in India based
on total market capitalization of over $200 bn as of 18 August 2022. Founded in 1988 as a commodity trading
business by businessman Gautam Adani, the Group has expanded rapidly across key industry verticals such as
energy, utilities and transportation. The Group has 6 established listed entities, namely Adani Enterprises
(AEL), Adani Green Energy (AGEL), Adani Ports and Special Economic Zone (APSEZ), Adani Power, Adani
Total Gas and Adani Transmission.

However, in recent years, the Adani Group has become increasingly aggressive in expanding its existing
businesses, as well as establishing new ones in different industries. The rapid expansion has largely been
fuelled by debt funding, that has caused the leverage (gross or net debt / EBITDA) of several group companies
and hence of the overall consolidated group to soar in the past few years. We, as well as many clients and other
investors, are becoming increasingly concerned about the group’s rapid pace of growth and its high leverage
levels. Excessive debt and overleveraging by the group could have a cascading negative effect on the credit
quality of the bond issuing entities within the group and heightens contagion risk in case any entity falls
into distress. We delve deeper into the Adani Group and discuss the key credit risks, prominent mitigants to
those risks, and provide our views on the Group’s possible credit trajectory.
KEY CREDIT CONCERNS

Over the past few years, the Adani Group has aggressively expanded across virtually all its businesses. This
includes both rapidly growing operations of its existing businesses (for example, Adani Green is aiming at
growing its operational renewable capacity almost five-fold by FY25), and entering into new sectors, in which it

has no prior experience/expertise in (including copper refining, petrochemicals, data centers and most recently,
telecom and alumina/aluminium production amongst others). In order to meet the ambitious growth plans it
has set for itself, the Adani Group is also active in expanding through the inorganic route (most recently, it
acquired Holcim’s controlling stake in Ambuja Cement and ACC Limited for $10.5 bn, thereby becoming the
nation’s second largest cement maker virtually overnight).
Aggressive Expansion in Traditional Businesses

We tabulate the key financials and capex plans of Adani’s traditional/legacy businesses below.
Noticeably, a majority of these businesses are capital intensive, and require large investments and
constant funding in the initial years (and thereafter too), considering these projects have long gestation
periods. Most of the projects/ventures are majority funded by borrowings (typically in the ratio of 3:1
debt/equity). In India, typical borrowing costs for infrastructure projects are as high as ~9-11% p.a. (depending
on domestic benchmark rates), which adds a large interest burden on the entities. Further, considering the
businesses do not make profits in the initial few years, they typically don’t have the ability to repay the
debt immediately, and rely on rolling-over/refinancing the obligations in the initial few years, which is in
turn dependent on maintaining solid banking relationships (touched upon later in the note) and on strong
capital market conditions.

We can see that, despite elevated leverage levels and poor interest cover (due to past expansion and the capital-
intensive nature of the projects, funded largely with debt), virtually all Adani Group companies have large
expansion plans on the horizon too, having adopted aggressive growth targets; which is not a financially
prudent strategy.
AGEL is one of the fastest growing Adani Group entities, as a frontrunner to achieve the Group’s goal of investing
$20 bn in clean energy businesses over the next 10 years. We saw its FY22 capex surge to INR 204 bn (roughly 5-6
times its average capex in previous years) owing to ongoing construction of its huge renewable project pipeline
and the acquisition of Softbank-backed SB Energy. Looking ahead, AGEL has ambitious goals to expand its
operational capacity almost five-fold from 5.4 GW (as at 31 March 2022) to 25 GW by FY25 (31 March 2025), which
would entail capex of INR 150-200 bn per annum (p.a.).
We see that the acquisition appetite remains strong even for well-established, traditional businesses such as
Adani Ports & SEZ (APSEZ) – one of the Group’s more stable entities. We saw APSEZ go on a fierce acquisition
spree from late-FY21 to FY22, where it spent a cumulative INR 211 bn to acquire three Indian ports at
Krishnapatnam, Gangavaram and Dighi. Looking ahead, it has financially onerous plans to develop a greenfield
port in east India (Tajpur), conclude a $1.2 bn acquisition of an Israeli Port (Haifa), and potentially acquire
state-owned (through Indian Railways) container logistics company CONCOR for over INR 400 bn (estimated
based on CONCOR’s current market cap) sometime during or post FY23.
Venturing into New/Unrelated Businesses

Being the primary incubator for Adani Group’s new and developing businesses, AEL invariably incurs the highest
capex amongst its sister entities. Over the past 5 years, AEL has invested heavily in new growth sectors that
include airports, cement, copper refining, data centers, green hydrogen, petrochemical refining, roads and
solar cell manufacturing. Looking ahead, it plans to foray into the enterprise data in telecom (for internal use at
present) and has massive plans to grow its green hydrogen and airports businesses. Just last week, the Group
also announced plans to set up a 4.1 mtpa integrated alumina refinery and a 30 mtpa iron ore beneficiation
plant in Odisha that could cost over INR 580 bn.
Particularly in recent years, the Group has rapidly forayed into a variety of new businesses; it has seemingly
adopted a more aggressive strategy in growing its size and scale. The Group’s entry into new business ventures
are summarized as follows:

On the one hand, such moves allow the Group to enjoy business diversification benefits and tap onto the rapid
growth prospects of these emerging industries. The Group has also shown that it is very good at executing scale
infrastructure projects well, starting with the Mundra port in 1998. Yet on the other hand, we remain wary of the
Group's limited expertise and track record in the new areas it is venturing into, which could hamper its ability to
execute the projects and manage the operations successfully in the longer term. These ventures are also
extremely capital intensive (as seen from the table above), which would likely increase the need for
additional debt incurrence to fund the capex needs and thus leading to sustained high leverage for the
Group.
Limited Evidence of Equity Capital Injections

Equity infusions by the key promoter, Gautam Adani and family, are not common in the Adani Group too.
Generally, the Adani family injects equity mainly into its newer businesses (which are all housed under AEL).
Once they are more sustainable, they are hived off to run independently, mostly by listing them on the stock
exchange. Thereafter, the businesses are largely reliant on bank loans, internal accruals (i.e. operating cash
flows) and debt capital market funding. In some instances, it draws equity infusions from other strategic or
financial investors for further funds needed for expansion (for example TotalEnergies' 20% stake in Adani
Green Energy and 25% stake in Adani New Industries Limited (ANIL), its green hydrogen venture), but these pale
in comparison to the total capex needs of the concerned entity.

With a net worth of $116 bn (as of 22 July 2022, per media reports), Gautam Adani has been in the news of late
for his astronomical rise in wealth, becoming the 4th richest person in the world after displacing Bill Gates.
However, we note that this is paper wealth, and largely tied to the value of his holdings in the Adani Group
stocks, which have risen significantly in recent years (we discuss this in more detail later). It is difficult to
gauge the family’s ability to inject their own funds in a scenario where any of the Group companies require equity
injections by the promoter.
The promoter group could dilute its stakes in other listed entities to raise cash to infuse into a faltering company,
but we foresee any liquidity/solvency issues in one entity to have an adverse contagion effect on the stock
prices/valuations of other entities within the group too. This would in turn lead to the promoter’s net worth also
falling and reduce the quantum of funds that can be raised from stake dilution drastically. Additionally, since
the 6 listed Group companies are separate legal entities, the provision of inter-company loans by a
performing company to its stressed sister entity would be a related-party transaction and raise corporate
governance issues. Though the Group entities do have existing inter-company loans too (mainly lent by APSEZ),
they are not that sizable. While the promoter group could funnel dividend income received from its key
subsidiaries into an ailing entity, we think the amount is too immaterial to have any impact (FY22 cumulative
dividend income from the 6 listed subsidiaries: ~INR 7.8 bn/$104 mn).
Hence, we feel many group companies require equity capital injections to reduce their high leverage levels. So
far, we have seen little evidence of equity capital injections into the group companies (except into AEL) despite
their high debt-to-capital ratios. Despite the promoter’s large net worth, it is difficult to predict the extent of
the promoter’s capacity to continually provide liquidity support due to potential contagion risk to the
whole Group in the event of one or more group companies falling into distress.
Competitive Risks with Reliance Industries

The Adani Group and Reliance Industries (RIL) are respectively helmed by Gautam Adani (India’s current
richest) and Mukesh Ambani (India’s second richest, displaced by Gautam Adani recently). Both individuals
hail from the state of Gujarat, which is located in Western India and is known for sprouting prominent
businessmen as well as for being the birthplace of current Prime Minister Modi. While Adani entered the
renewable generation business through Adani Green Energy (AGEL) in 2015, RIL too announced its foray into
the sector in October 2021, and plans to become one of the largest players in the sector with a 100 GW capacity
within this decade. On the flip side, RIL made its entry into the telecom sector first with Reliance Jio in 2015,
ousting several incumbents and becoming one the of leading players since, while Adani followed into the
telecom business by successfully bidding for spectrum in India’s recently-held 5G auctions. At present, Adani
plans to use the 5G airwaves only to provide 5G enterprise network solutions (B2B) for private use and enhance
its group-wide cyber security, clarifying that it was not looking to enter the commercial consumer telecom
business. That being said, we cannot totally rule out the possibility of Adani eventually deciding to enter the
consumer mobile segment, which might provide stiff competition to incumbents Jio and Bharti Airtel.

As the two mega conglomerates in the Indian corporate sector compete for market share in a few new economy
businesses (e.g., renewable power, telecom), it could lead to some imprudent financial decisions from both
sides, such as higher capex spends, aggressive bidding, and overleveraging. On the whole, RIL has been on a
deleveraging trend over the past few years, and boasts robust credit metrics (gross and net leverage at 2.6x and
2.2x as at end-FY22) and interest cover (7.8x at FY22). On the other hand, as highlighted above, Adani has
elevated leverage and poor interest cover and cash outflows across virtually all its entities, and is at greater
financial risk.
Governance and ESG Risks

We note that the Adani family holds major stakes (37-75%) in all its 6 listed entities (refer to Corporate Structure
of Key Entities chart above).
The promoter family sits on the Boards of all the Adani entities. Gautam Adani is the Chairman of all the 6 listed
Adani entities, and his family members are present on the Boards too, including brother Rajesh Adani (director at
various entities), son Karan Adani (director and CEO of APSEZ), nephew Sagar Adani (director of AGEL), and
another nephew Pranav Adani (director at AEL & Adani Total Gas). While the entrepreneurial vision of Gautam
Adani is impressive, it also comes with high key-man risk, as the senior management capability in the
group companies in his absence may prove to be inadequate. Gautam Adani is presently 60 years of age. He
may look to hand over the reins of his business empire to the next generation at some point in the next 10 years,
as gauged by the senior management / Director roles handed to his son or nephews in Adani entities. However,
he has not publicly disclosed any succession plans for the future.
Within the past decade, and especially in the past 2 years (even amid poor stock market conditions of 2022), all
of Adani Group’s publicly listed entities have witnessed a meteoric rise in their stock prices (as shown above) and
valuations, making the Group the third most valuable conglomerate in India, after Reliance Industries and the
Tata Group. The shares of the Adani Group companies have a low free float as the promoter family owns
stakes very close to the maximum stipulated by the stock regulator for listed companies in India. Adani
holds over 60% in 2 entities, and ~75% in 3 others (refer to Corporate Structure table above). Since promoter
shares are not traded frequently, any trading activity in the remaining free float shares has a magnified impact
on the stock prices of the companies.
Further, unlike other large publicly listed entities in India, most Adani Group stocks have little to no holdings
from domestic mutual funds/institutions; majority shareholders are the Promoter Group, followed by foreign
portfolio investors (FPIs). For example, domestic mutual funds held just 1.8% in Adani Enterprises, while the
Promoter Group holds 72.3% and foreign portfolio investors hold 15.8%, as at 31 March 2022. Similarly, 74.8% of
Adani Total Gas is owned by the Promoter Group (comprised of the Adani family and French O&G company
Total), foreign portfolio investors hold 17.8%, and onshore mutual funds hold just 0.03%.

Some foreign investors in Adani Group stocks also include certain opaque funds, such as Albula Investment
Fund, Cresta Fund and APMS Investment Fund, all of which are registered at the same address in Port
Louis, Mauritius. The majority of these funds’ AUM is in Adani Group stock and there is little clarity regarding the
ultimate, beneficial owner of these funds. Though there was news last year regarding the stock regulator,
Securities & Exchange Board of India (SEBI) investigation for alleged stock price manipulation, SEBI has since
cleared the Adani Group companies of any potential irregularities. A shareholding structure dominated by the
Promoter Group and foreign portfolio investors, some of which are quite opaque, along with minimal equity
research coverage by sell-side banks (whether local or foreign), is quite unusual for such large-cap stocks.
The Adani Group is also exposed to moderate levels of ESG risks. It remains heavily involved in coal mining
(executed by Adani Mining, under AEL) and coal-fired power generation (executed by Adani Power), which are
ESG-negative sectors. The Group also has plans to double its coal-fired power generation capacity to 24 GW
sometime in the future, and faces ongoing flak over its involvement with the tainted $2 bn Carmichael coal
mine project in Australia. Announced in 2010, the mine drew strong criticisms from the public and the press
due to various anticipated environmental damages, and resulted in several large investment firms (e.g. PIMCO,
Norwegian pension fund KLP) declining to invest in the Group’s public bond offerings. Of late, the Group has
found itself embroiled in more ESG-negative events, namely: 1) APSEZ’s alleged ties with the Myanmar military
over the proposed development of Yangon Port, though this is in the process of being divested; 2) A probe by
India’s securities watchdog into Adani Group entities over purported share price manipulations (as elaborated
above). While we do note that the Group’s entry and rapid expansion in the renewables space is positive from an
ESG lens, we remain wary of its persisting ESG issues that could sour investor sentiment for the name.
KEY MITIGANTS OF CREDIT CONCERNS

Owing to its reputation both with bank lenders and in the domestic market, and diverse asset base in stable
infrastructure industries, we see a few mitigating factors to the credit concerns highlighted above. These include:
Sound Banking Relationships

At present, the Adani Group enjoys solid banking relationships with both domestic and international
banks, which have been willing to lend the various entities large amounts for both its existing businesses
and new ventures. The Group’s lenders are diverse and notably larger better-quality banks, which grants it
wider, larger and easier access to funding channels. We think the bank lenders feel comfortable lending to the
Adani Group, since most businesses are infrastructure-based, with revenue visibility and relatively stable cash
flows and bolstered by the underlying hard, physical infra assets, in case a company defaults on its debt
obligations. In turn, sound banking relations mitigates the liquidity crunch faced by most of the Adani
entities, as seen from the poor cash-to-short term debt ratios of all (< 0.1x) except APSEZ (1.5x).
Another mitigating factor is that of the 4 $ bond issuers, AGEL, Adani Transmission and Adani Electricity
have a high proportion of their gross debt (> 90%) in the form of secured debt, which includes all their $
bonds. Meanwhile, APSEZ's $ bonds are all unsecured, but its proportion of secured debt/gross debt is
reasonably low at 28%. Thus, we feel none of the $ bonds issued by the 4 Adani entities are
structurally/contractually subordinated (to a material extent) to secured debt within its respective capital
structure. It is comforting to see that most of the $ bonds in the Group are secured in nature or pari passu
with most other debt, which suggests a reasonably high degree of recovery for $ bondholders in case of a
potential restructuring/liquidation.
Additionally, the Group has also been able to tap the $ bond markets repeatedly, and raised debt at
reasonable rates. APSEZ has 6 bonds or a cumulative $3.9 bn outstanding, AGEL has $1.9 bn outstanding across
3 bonds, Adani Electricity with 2 $ notes for $1.3 bn outstanding and Adani Transmission with $938 mn (across 2

notes), which depict the Adani entities’ access to the offshore debt capital markets. We also note that APSEZ,
Adani Electricity Mumbai and Adani Transmission have all received investment grade (IG) ratings (all 3 are rated
Baa3/ BBB-/ BBB-) from the 3 international rating agencies (Moody’s, S&P & Fitch), which reflect the Group’s
large scale, resilient operations, robust business profile, and able management, which creditors rely on while
investing in these names. This reputation should in turn allow the Group to refinance/roll-over its obligations
through its various funding channels and obtain requisite funding for its hefty capex needs too. Though the
Adani Group companies do have a number of $ bonds outstanding at present, we note that a majority of them
have been issued in the past half decade (since 2016, and especially in the past couple of years); to date, it has
come good on honouring its bond obligations and other debt obligations, to the best of our knowledge.
The promoter family has currently pledged minimal stakes in the 6 listed entities. This leaves room for them to
pledge their residual stake as collateral, in case they feel the need to raise funds and potentially infuse liquidity
support to a subsidiary in need of cash.
However, we do point out that at some point in time, Indian lenders may hit a wall against single borrower limits
(set at 20% of their Tier-1 capital) for the Adani Group companies, at which point the entities may not be able to
tap on to those domestic banks for additional borrowings (though refinancing of existing debt should be
possible). Foreign banks prefer to lend through project loans at the individual company level so that these loans
are adequately collateralised.
We tabulate the major loans recently obtained by the Group companies’ below, which show the Group access to
bank loans and the lenders’ willingness to provide funding.

Strong Track Record, Stable Infrastructure Assets

The Adani Group has a strong track record of churning out strong and stable companies through its Adani
Enterprises incubator arm. Given AEL’s history of having successfully incubated and commercialised new
companies, we believe the Group’s competencies can be similarly applied across its newly emerging portfolio
companies. Even while many of Adani Group companies are expanding organically, they have consistently
exhibited a strong execution track record. They have typically completed their ongoing projects successfully
and on-time, that allays the execution risks associated with their planned and upcoming projects too.
We also note that since the Adani family has a majority shareholding in 5 out of 6 listed entities, the family’s
(including Gautam Adani’s extended family) entire fortune and reputation is tied to the Adani Group companies.
Having such major ‘skin in the game’ could imply that the family would pull all stops to avoid default in
any of the entities, since any material liquidity/solvency issue in one company would likely have a
contagion effect on the valuation of the remaining companies too. Considering the Group companies are
fairly diversified and operate in different industries, were one company to face liquidity/solvency issues, we
believe the other entities may probably be still performing well operationally and financially, which provides
elbowroom for it to deploy intercompany liquidity support (subject to a cap for each company) to alleviate a part
of that particular company's liquidity issues. Having said that, we cannot be certain that the intercompany loan
support will be available, since a lot depends on the particular special situation at hand and what realistic
options are available to the company at that time.
The Adani Group boasts a portfolio of stable infrastructure assets tied to the healthy functioning of the
Indian economy. APSEZ and Adani Transmission (both relatively stable IG-rated names in the Group) provide
critical port operations and power transmission services, while its sister entities Adani Power and Adani Total
Gas provide critical utility services. Revenues generated from such services are generally recurring and long-term
in nature, which improves the Group’s revenue and cash flow visibility.

Leading Market Positions in Key Sectors of India’s Growing Economy

The Adani Group companies have managed to become a dominant force in key sectors of India’s growing
economy. For example, APSEZ has grown rapidly to become the largest private port operator in the country,
having built India’s largest port in Mundra, Gujarat, and subsequently developing/acquiring other major ports in
other major states of Andhra Pradesh, Odisha and Tamil Nadu. AGEL was established only in 2015, but has since
grown manifold to become the country’s 2nd largest private renewable power producer based on operational
capacity (after ReNew Power, which was established over a decade ago); AGEL has set a goal to become the
country’s largest renewable power producer by FY25. Adani Transmission, Adani Power and Adani Total Gas
boast market-leading positions in the private sector in their respective sectors too. This reflects the Adani
Group’s vision, backed by execution and operational skills, as well as the fact that its leading market positions in
the respective sectors places it well to benefit from India’s growth story.
Policy Tailwinds and Ties with the Administration

We also believe there are policy tailwinds supporting the development of such infrastructure assets. The
Government of India’s FY22-23 budget unveiled a sharp increase in proposed infrastructure spending (35.4%
increase in infrastructure capex to INR 7.5 tn, equivalent to ~3% of India’s GDP), earmarked for sectors such as
railways, roads, power, telecoms and affordable housing, sectors in which Adani has a presence in. We believe
that increased government support for these infrastructure projects could translate into better growth
opportunities and financing conditions, as banks increase their loan exposure to the industry and move to
align themselves with the government’s nation-building agenda. Additionally, government spending in areas
such as power and railways also present new opportunities for Adani companies such as Adani Power and Adani
Tracks Management Services to secure new tenders and concessions, which would boost the Group’s recurring
revenues and future earnings.
Gautam Adani also enjoys healthy relations with the ruling Modi administration. Mr. Adani and Indian Prime
Minister Mr. Narendra Modi know each other well, going back to the latter’s days as the Chief Minister of Gujarat
state. At the minimum, this ensures no impediments to the Adani Group growth agenda.
CONCLUSION: WE REMAIN CAUTIOUSLY WATCHFUL

The Adani Group behemoth continues to expand aggressively in both its traditional and new business ventures,
a majority of which operate in capital-intensive sectors. Additionally, this expansion is both organic and
inorganic in nature, funded predominantly with debt, leading to elevated leverage ratios. In a worst-case
scenario, ambitious debt-funded growth plans could eventually spiral into a massive debt trap, and possibly
culminate in a distressed situation or default of one or more group companies, which may impact the broad
Indian markets and economy.
Yet on a positive note, we do take comfort in the Group’s strong access to diverse funding channels
(onshore and offshore banks and capital markets), relatively stable recurring-revenue generating
infrastructure assets, presence in key sectors of the economy and the positive infrastructure-favoured
macro backdrop in the country.
Overall, we remain cautiously watchful of the Group’s growing expansion appetite, which is largely debt-
funded. We retain our existing Market perform recommendations on the two Adani Group companies
under our coverage presently, AGEL and APSEZ.
For more research on the Adani Group, please see:
AGEL FY22: FCFs Sink as Higher Capex Kicks In

AGEL: UAE’s IHC to Invest INR 38.5 bn
APSEZ FY22: Charting Resilient Growth
APSEZ: Set To Develop Tajpur Greenfield Port
APSEZ: Wins $1.2 bn Bid For Israeli Haifa Port
Asia Conference 2022: South and SEA Corporates
India Renewables: Bond Structure Comparison
S & SEA Corporates: Currency Risk Exposure
We would like to thank Koh Yi Qian for his contributions in preparing this report.
AUTHORS
Lakshmanan R, CFA, FRM

Senior Analyst – Asia-Pacific Corporates
Rohan Kapur
Analyst - Asia-Pacific Corporates
Jonathan Tan
Analyst - Asia-Pacific Corporates
RELATED COMPANIES
Adani Green Energy Adani Ports and SEZ Adani Transmission
Questions? Contact Erin Lyons via email at elyons@creditsights.com (mailto:elyons@creditsights.com) or call

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CreditSights - Adani Group - 23 August 2022

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8/23/22, 11:25 AM CreditSights - Adani Group: Deeply Overleveraged

Adani Group: Deeply Overleveraged

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KEY CREDIT CONCERNS

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Aggressive Expansion in Traditional Businesses

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Venturing into New/Unrelated Businesses

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Limited Evidence of Equity Capital Injections

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Competitive Risks with Reliance Industries

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Governance and ESG Risks

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KEY MITIGANTS OF CREDIT CONCERNS

Sound Banking Relationships

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Strong Track Record, Stable Infrastructure Assets

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Leading Market Positions in Key Sectors of India’s Growing Economy

Policy Tailwinds and Ties with the Administration

CONCLUSION: WE REMAIN CAUTIOUSLY WATCHFUL

For more research on the Adani Group, please see:

AGEL FY22: FCFs Sink as Higher Capex Kicks In

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AGEL: UAE’s IHC to Invest INR 38.5 bn

APSEZ FY22: Charting Resilient Growth

APSEZ: Set To Develop Tajpur Greenfield Port

APSEZ: Wins $1.2 bn Bid For Israeli Haifa Port

Asia Conference 2022: South and SEA Corporates

India Renewables: Bond Structure Comparison

S & SEA Corporates: Currency Risk Exposure

Lakshmanan R, CFA, FRM

Adani Green Energy Adani Ports and SEZ Adani Transmission

Questions? Contact Erin Lyons via email at elyons@creditsights.com (mailto:elyons@creditsights.com) or call

© 2022. Copyright CreditSights, Inc. All rights reser ved.

NOT FOR REPRODUCTION OR DISTRIBUTION

© 2022. CreditSights, Inc. All rights reserved.

NOT FOR REPRODUCTION OR DISTRIBUTION

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