'Adani Group Has Reduced Share Of Indian Banks In Their Borrowings,' Says Jefferies

After concerns about too much debt on the Adani Group and significant exposure on Indian Banks, global brokerage Jefferies said the that the exposure of the banks is within manageable limits. 

The brokerage stated in a note that the group's consolidated debt is at Rs 1.6 trillion, and Debt/Ebitda is down from 4.3x in FY16 to 3.2x in FY22.

It added that the recent acquisition of the cement business might add around Rs 600 bn to debt but, at the same time, will also lift its cash flow.

"We watch for progress but see low risks for banks," the firm stated.

According to Jefferies, the group's debt accounts for 0.5 per cent of total loans across the Indian banking sector. Among public sector banks, the debt is at 0.7 per cent of total loans, and for private banks, it is at 0.3 per cent.

It said that the group had reduced its share of Indian banks in their borrowings from 86 per cent in FY16 to 33 per cent in FY22.

It added that the share of bonds and foreign banks in total debt has risen to 37 per cent and 18 per cent now respectively.

The firm also noted that based on its conversation with industry participants, the group's cash flows and repayment timelines of debt had been conservatively planned.