Gautam Adani’s ports unit is considering plans to repay up to INR 50bn ($605m) of loans in a bid to restore investor confidence in the jewel in the Indian billionaire’s business empire.
Shares in Adani Ports & Special Economic Zone (APSEZ) have suffered a brutal sell-off after US short-seller Hindenburg Research levied accusations of accounting fraud and market manipulation at the wider Adani Group.
The company said Tuesday that the loan repayment would improve net debt to earnings before interest, taxes, depreciation, and amortisation ratio to about 2.5 times from the current three times.
APSEZ also told investors that it would halve capital expenditure for the next financial year to INR 86bn for the year ending March 2023, to between INR 40 to INR 45bn.
The Adani Ports guidance “could ease concerns around the firm’s liquidity and debt, though governance and regulatory risks are likely to linger,” Bloomberg Intelligence analyst Sharon Chen wrote.
“This could also offer assurance that it might not materially increase related-party loans to support the rest of the group, as free cash flows have been earmarked for debt repayment.”
APSEZ is India’s largest private port company and controls around 24% of India’s cargo market.
On Tuesday, the company reported a 16% drop in profit to INR 13.2bn for the latest quarter, missing the analysts’ estimate of about INR 15bn.
Last week, TotalEnergies, one of the largest foreign investors in Gautam Adani’s business empire, said its exposure to the group was “limited”.
The French oil major said its investments in Adani’s entities were undertaken in full compliance with applicable — namely Indian — laws, and with TotalEnergies’ own internal governance processes.
In 2018, TotalEnergies first embarked on an energy partnership with the Adani Group in 2018 with the development of a joint LNG business, Adani Total Private Limited (ATPL).
ATPL aims to develop the Dhamra LNG regasification terminal — which is expected to start operations in the second quarter of 2023 — and to market LNG.
TotalEnergies also holds a 19.75% stake in Adani Green Energy the world’s largest developer of hybrid wind/solar power farms.
It also holds a 25% interest in Adani New Industries, a green hydrogen venture.
