Adani Ports to repay Rs 5,000 crore loan; to cut capex

MUMBAI: The CEO of Adani Ports and Special Economic Zone on Tuesday said the company is looking to reduce its debt leverage, a day after it announced that promoters have released a significant portion of their pledged shares in the infrastructure outfit . Adani Ports CEO Karan Adani, who is the eldest son of the company’s chairman Gautam Adani, said the unit will pay off Rs 5,000 crore of debt in the next financial year which will help improve its financial profitability.

The company had a gross debt of Rs 45,534 crore as on December 31, 2022. Net debt, which is net of cash, stood at Rs 39,277 crore. Karan said the debt service would improve the ratio of net debt to operating profit to about 2.5 times by March 2024. Currently, the ratio is 3.2 times. A major portion of Adani Ports’ debt is reflected in foreign borrowings.

Adani Ports said it will use the cash surplus generated through operations to repay/prepay borrowings of Rs 5,000 crore during the next financial year.

India’s largest port operator had cash and cash equivalents of Rs 6,257 crore as on December 31, 2022.

The finances of Adani Ports and its sister companies have come under public scrutiny after American researcher Hindenburg expressed concern about their high debt levels. Karan’s decision to improve the leverage metric of Adani Ports will allay investor jitters.

Adani Ports also said that it will halve its capital expenditure in the next financial year as compared to this financial year. It has estimated capex of Rs 4,000-4,500 crore for FY24 as against Rs 8,600 crore in FY23. However, it has raised its operating profit target for the next financial year to Rs 14,500-15,000 crore as against Rs 12,200 crore. – Rs 12,600 crore for the current financial year.

Gautam Adani and his family hold 65% stake in Adani Ports. The Adani Group on Monday announced that the promoters have paid off $1.1 billion in debt to release pledged shares in three listed entities, including Adani Ports. As a result, the promoters’ pledged stake in Adani Ports has come down to 5% from 17% earlier.