Bernstein view on Adani Group: Debt repayment and refinancing next year will be the real test

Since the Hindenburg report was released on the 24th of January, the 10 Adani stocks have seen their market capitalisation erode by more than Rs 12.4 lakh crore. Currently, the market cap of the companies stands at Rs 6.8 lakh crore.

Meanwhile, According to a report by Bernstein, a global investment research and management firm, the period from March to September 2024 will be the real test for the group with regard to its debt repayment and refinancing capabilities.

One of the significant debt obligations for the Adani Group is the leverage of $3 billion taken for the acquisition of Ambuja Cements in 2018. This debt is maturing in March 2024, and the Adani Group will have to find a way to repay or refinance it. In addition, the Ambuja warrants require a fund infusion of ₹15,000 crore by April 2024, which adds to the group's debt burden.

The second tranche of $1 billion taken for the Ambuja acquisition is maturing in September 2024, which adds to the pressure on the Adani Group's finances.

Apart from the Ambuja debt, the Adani Group also has other significant debt obligations to meet. The Adani Ports $650 million bond is maturing in July 2024, which is unsecured debt. This means that the bondholders do not have any collateral to recover their money if the Adani Group defaults on the payment.

The Adani Green's bond of $750 million is another significant challenge for the group. This bond is currently at a yield of 20 percent indicating that the market pricing is in a high risk of default. If the Adani Group defaults on this bond, it will have severe implications for its reputation and creditworthiness.

While the Ambuja and Ports businesses have strong assets, the timing of the Ambuja maturity can put a strain on the group's growth plans as well as the liquidity plans that they have in store as far as their own capex is concerned.