Gautam Adani’s Empire “Deeply Overleveraged,” Warns New Report
According to a research by CreditSights, a division of Fitch Corporation, Indian billionaire Gautam Adani’s ports-to-power conglomerate is “seriously overleveraged,” with the group making aggressive investments in both new and current businesses that are primarily financed with debt. CreditSights said in the study released on Tuesday that the ambitious expansion pursued by the Adani Group, headed by Asia’s richest person, has put pressure on its credit metrics and cash flow, and that “in the worst-case scenario” it may spiral into a debt trap and eventually fail.
The agency stated, alluding to capital infusions from the founders of the Adani Group, known as “promoters” in India, that “we detect minimal evidence of promoter equity capital injections into the group firms, which we view is needed to decrease leverage in their stretched balance sheets.”
Requests for comment regarding the report were not immediately answered by an Adani Group spokesman. All seven of Adani’s listed companies saw declines on Tuesday ranging from 2% to 7%. The CreditSights report comes after a busy few years for Adani, who has been rapidly diversifying his business, which was previously focused on ports and coal mining, to include data centres, cement, and green energy in addition to those other sectors.
The organisation recently promised to invest $70 billion in renewable energy initiatives. Adani’s status in India has increased as a result of these actions, and this year his net worth surpassed $135 billion. Additionally, he is rapidly entering industries controlled by Mukesh Ambani of Reliance Industries Ltd., a fellow countryman who he succeeded as Asia’s richest man.
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