Adani’s green business debt ratio needs ‘watch’ as it hits 95.3%
A key financial measure of Adani Green Energy Ltd. is showing signs of concern as its billionaire owner takes on more debt to become a renewable energy giant.
The debt ratio of the company owned by Gautam Adani climbed to 95.3%, a “higher” level for a private company, according to Sharon Chen, an analyst at Bloomberg Intelligence. The company’s capital expenditure plans and its financing are other factors that need close monitoring, Chen added.
“We would be more comfortable with a level of 70% or up to 80% for a growth-stage business,” she said. “Adani Green deserves to be watched closely.”
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Asia’s richest man has pledged to invest around $70 billion across the green energy supply chain by 2030. His conglomerate aims to become the biggest energy producer renewable in the world by the end of this decade. This makes Adani a key player in India’s quest to become zero carbon by 2070.
True, Chen said the Adani Group used to bring in outside investors to invest money and foreign companies were very interested in India. “Adani is in that sweet spot,” she said.
Yet Adani Green is one of the most indebted companies in the tycoon’s empire, with Asia’s second-worst debt-to-equity ratio of 2,021%.