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Adani Group’s Cost of Capital Falls to 8.18% as Financial Outlook Improves
In a recent investor meeting, Adani Group announced a significant reduction in its cost of capital, now at 8.18%, following multiple credit rating upgrades and a resilient earnings profile. The conglomerate maintains a strong financial position, paving the way for ambitious investment plans over the next decade.
Adani Group, India’s largest infrastructure conglomerate, has reported a notable improvement in its financial metrics, cutting its cost of capital by 104 basis points to 8.18% in FY25. This development reflects the company’s strengthened credit profile, bolstered by recent rating upgrades and a robust business model. During a presentation to investors, company officials highlighted the implications of these financial improvements and how they position Adani Group favorably in the competitive infrastructure sector.
Key Highlights of Adani Group’s Financial Performance
- Cost of capital now stands at 8.18%, down from previous years.
- CRISIL upgraded Adani Power’s rating to ‘AA’ and revised Adani Green’s outlook to ‘Positive’.
- Run-rate EBITDA has surged from Rs 25,389 crore in FY19 to Rs 91,693 crore for December 2024 TTM.
- 75% of profits are now generated from assets rated ‘AA-’ or higher, up from 48% in FY19.
- Leverage is at a low of 2.46x net debt to EBITDA, ensuring financial stability despite aggressive expansion.
Strategic Expansion and Investment Plans
According to Adani Group’s CFO, Jugeshinder Singh, the company is set to invest over $100 billion (approximately Rs 8 lakh crore) in projects over the next decade, all funded by internally generated cash flows.
- The operational cash generation over ten years is projected to reach about $71 billion.
- Ongoing projects will add another estimated $41 billion.
- Current free cash reserves are around $6 billion.
- This financial strategy allows Adani to cover its upcoming $21 billion debt maturities without refinancing.
Singh emphasizes that their approach is deliberate: “We will only invest $100 billion. Our current cash flow and investments can fully meet our commitments.” This strategy positions Adani Group not only to survive but thrive in the ever-evolving infrastructure landscape.
Conclusion
The decline in Adani Group’s cost of capital is a testament to its enhanced credit profile and solid financial strategy. With ambitious plans set for the coming decade and strong internal cash flows, the conglomerate looks poised to expand while maintaining financial stability.
Keywords: Adani Group, cost of capital, credit rating upgrades, financial stability, infrastructure investment, EBITDA growth, cash flow, debt management
Hashtags: #AdaniGroup #Investment #FinancialStability #Infrastructure #CreditRatings #BusinessGrowth #IndiaEconomy
