According to those in the know, Gautam Adani is preparing to prepay a sizable portion of his loans against shares (LAS) portfolio, which totals between Rs 7000 and Rs 8000 crores and is secured by share pledges at the shareholder level, in order to calm investor jitters.

On Monday itself, a formal ruling is anticipated in this matter. The LAS exposure will be reduced gradually over the next 30-45 days, beginning right away.

Some of these facilities were taken from domestic and international institutions, including Credit Suisse and JP Morgan.

No one from the Adani Group was immediately available for comment.

One of the people in the know said that, in some circumstances, the group would even provide additional share securities, if necessary to allay investor fears.

Adani

According to JP Morgan analysts Varun Ahuja and Aman Aggarwal, “Our worries are more at promoter-level uncertainty (shareholder structure, unclear leverage, etc.) than opco level.”

According to their estimations, promoter-level loans total ($1.8 billion) and are based on management advice.

“We arrive at $5.2 billion in committed stake value by adding up all share promises at their numerous listed entities. Additionally, we observe that they have $5 billion in debt relating to Holcim India, of which $1.0-1.5 billion is margin financing and the remaining amount is senior debt.

As of September 22, the cement asset had over $1 billion in cash and an annual EBITDA of $700-800 million compared to that.

According to their estimations, promoter-level loans total ($1.8 billion) and are based on management advice.

“We arrive at $5.2 billion in committed stake value by adding up all share promises at their numerous listed entities.

Additionally, we observe that they have $5 billion in debt relating to Holcim India, of which $1.0-1.5 billion is margin financing and the remaining amount is senior debt. As of September 22, the cement asset had over $1 billion in cash and an annual EBITDA of $700-800 million compared to that.

According to Bloomberg data, the 3.375% bond issued by Adani Green Energy that will mature in August 2024 is currently trading at 61.27 cents on the dollar and has a yield of 38.33%.

Adani Renewable Energy’s 4.625% bond due in October 2039 is trading at 68.47 cents on a dollar with a yield of 8.10%, and Adani Port and SEZ’s 3.1% bond maturing in February 2031 is trading at 65.44 cents on a dollar with a yield of 9.33%. The CLSA estimates that the Adani Group owes. in foreign currency.

A bond trader for an MNC firm claimed that if the price of an offering of investment-grade bonds fell by 70 cents on the dollar, it would indicate that the market was concerned that the companies might not be able to pay the interest on their bonds in the future.

Given that the market capitalization has taken a significant hit and the flow of bad news has not subsided, certain rating agencies may downgrade the company immediately.

There is a direct correlation between market capital depreciation and the ability of the company to raise debt or rollover current debt.

Even after receiving guarantees from the heads of Life Insurance Corporation of India and State Bank of India NSE -0.31%, the business intends to emphasise to the markets that its exposure to Indian banking represents less than 40% of the overall debt of the group.

Within this, the exposure of private banks is less than 10% of the overall group debt, and the majority of banks—ICICI and Axis—have indicated.

About The Author

Copy link