Adani announces surplus cash, Hindenburg fails to dent Indian economy

Adani Group has announced that it possesses sufficient cash reserves to manage over 30 months of debt obligations, a strategic decision intended to mitigate concerns regarding its liquidity risk as the Indian conglomerate considers new fundraising efforts for its primary unit.

According to its earnings report released on Monday, billionaire Gautam Adani's group indicated that its cash reserves represented 24.8% of its total gross debt after the first quarter of the fiscal year commencing in April, an increase from 17.7% in the same period the previous year.

The conglomerate, which operates across various sectors including ports and power, reported a 33% increase in its earnings before interest, tax, depreciation, and amortization (Ebitda), amounting to approximately 225.70 billion rupees ($2.7 billion) for the quarter ending June 30.

This improved financial performance coincides with Adani Enterprises Ltd, the group's flagship company, exploring the possibility of raising between 100 billion rupees and 120 billion rupees through share issuance, following the recent successful capital raise of $1 billion by its energy transmission division.

Boosting investor confidence

The successful execution of this financing, along with indications of enhanced cash flow, would assist Adani Group in restoring investor confidence after allegations of extensive fraud and corporate misconduct were made by US short-seller Hindenburg Research in early 2023, which resulted in a significant decline that temporarily wiped out over $150 billion from its market capitalization. Adani has consistently refuted these allegations.

At the conclusion of the quarter, the total gross debt of the Adani Group was recorded at 2.41 trillion rupees.