Amid the dust raised by Hindenburg Research’s report on the Adani Group, CLSA said the Indian banking sector’s exposure to the group is less than 40 per cent of total group debt.

Analysts with the institutional brokerage and investment group, in a report, estimated that on an absolute level, exposure of banks to top-5 Adani group companies—Adani Enterprises, Adani Ports, Adani Power, Adani Green and Adani Transmission—is ₹70,000-80,000 crore of the group’s consolidated debt of ₹2 lakh crore in FY22.

“While debt levels have doubled from ₹1-lakh crore to ₹2-lakh crore in the past three years, bank debt has increased by more than 25 per cent.

“The share of bank debt in overall group debt has reduced materially and we estimate that incrementally banks have only lent ₹15,000 crore, or 15 per cent of the ₹1 lakh crore the group companies have borrowed over the past three years,” said the analysts.

CLSA assessed that private banks’ exposure is below 10 per cent of total group debt, indicating that they have largely financed assets with strong cashflows such as airports/ports.

Adani versus Hindenburg: A perennial battle between the bulls and the bears  Adani versus Hindenburg: A perennial battle between the bulls and the bears  

“PSU banks do have material exposure (30 per cent of group debt) but this debt has not increased in the past three years.

“Most of the incremental funding to the group for new businesses and acquisitions has come via overseas sources…Large acquisitions, such as cement, have been fully funded by foreign banks,” said CLSA’s Adarsh Parasrampuria, Mohit Surana, Piran Engineer and Shreya Shivani.

CLSA said the ballpark exposure of private banks to the Adani Group is 0.3 per cent of FY24 loans and 1.5 per cent of FY24 networth. For PSU banks, the exposure is 0.7 per cent of FY24 loans and 6 per cent of FY24 networth.

The analysts noted that bank debt (term loans, working capital and other facilities) forms just 38 per cent of the total debt, while bonds/CP constitute 37 per cent, 11 per cent of the total debt is from financial institutions and the remaining 12-13 per cent is inter-group lending.

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The analysts said the group has indicated that the share of PSU banks in its funding mix has dropped from 55 per cent in FY16 to 26 per cent now, while the share of private banks has plunged from 31 per cent to 8 per cent.

A greater part of the group’s funding now comes from bonds at 37 per cent (funding ports and the transmission business) and from foreign banks (18 per cent of debt), they added.

Hindenburg Research, an investment research firm with a focus on activist short-selling, alleged serious financial risks at Adani group.

The firm said that four of Adani’s listed companies are on the brink of the delisting threshold due to high promoter ownership.

The report also said that five companies in the group (all but Adani Ports and Adani Wilmar) have current ratios below 1.0, suggesting a heightened short-term liquidity risk.

Adani group denied all the allegations made by Hindenburg Research and said the report was published with malicious intent.

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Jugeshinder Singh, Chief Financial Officer, Adani Group, said the report was published “without making any attempt to contact us or verify the factual matrix”.

“The timing of the report’s publication clearly betrays a brazen,  mala fide intention to undermine the Adani Group’s reputation with the principal objective of damaging the upcoming follow-on public offering from Adani Enterprises, the biggest FPO ever in India,” he said.