Adani Group on Monday said that it has enough cash to cover its debt payments for the next 30 months, reported Bloomberg.
This announcement is seen as a move to address concerns about the company’s financial health. The conglomerate is also considering new fundraising efforts for its flagship unit, Adani Enterprises Ltd.
According to the company’s earnings release, Adani’s cash balance made up 24.8% of its gross debt as of the end of the first quarter of the fiscal year that began in April.
This is an increase from 17.7% a year earlier. The improvement in cash reserves comes at a crucial time for the group, which has been under scrutiny following accusations from US-based short-seller Hindenburg Research.
In early 2023, Hindenburg Research accused Adani Group of widespread fraud and corporate misconduct. These allegations led to a huge loss in market value for the conglomerate, wiping out over $150 billion at one point. Despite these accusations, Adani has consistently denied any wrongdoing.
In the quarter that ended on June 30, the Adani Group’s earnings before interest, tax, depreciation, and amortization (Ebitda) rose by 33%, reaching approximately Rs 225.70 billion ($2.7 billion). This increase in earnings is a positive sign for the company as it seeks to regain investor trust.
The stronger financial performance comes as Adani Enterprises Ltd. is considering raising between Rs 100 billion to Rs 120 billion through a share sale. This follows a successful fundraising effort by its energy transmission unit, which recently raised $1 billion.
Adani Group’s gross debt at the end of the quarter was reported to be Rs 2.41 trillion. The company’s ability to maintain a healthy cash reserve is seen as a crucial factor in managing its debt obligations and ensuring continued operations without disruptions.
The completion of the proposed fundraising and the positive financial results could help the Adani Group restore investor confidence. This is especially important after the significant losses the company faced in the wake of the Hindenburg allegations.
Shares of Adani Enterprises were trading at Rs 3,100.30, down 0.27% as of 3:20 PM.
