Adani Group to nearly double FY25 capex at ₹1.3 trillion

The capex will be funded through debt and equity, including internal accruals and capital from promoters, the group's chief financial officer Jugeshinder Singh said on Tuesday. The Gujarat-based conglomerate had outlined about ₹70,000 crore for capex in FY24.

The group will invest nearly 85% of the planned amount in infrastructure and utilities, including ₹34,000 crore in renewable energy. About ₹7,000 crore will go into the ports business, ₹4,200 crore in data centres business under unlisted AdaniConneX, and the rest in airports, roads and energy equipment manufacturing.

Adani will raise $2.5-3 billion by selling shares in group companies this fiscal, Singh said. In May, the boards of group flagship Adani Enterprises and Adani Energy Solutions had passed enabling resolutions to raise ₹16,600 crore and ₹12,500 crore of equity. “Our average equity programme is going to be ₹2.5-3 trillion. We are in discussions with more than 116 potential investors," he added.

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The Adani group's plans come at a time of renewed calls for the private sector to step up with capex. In the last few years, the government has done much of the capex heavylifting in India, while the private capex stayed muted. In February, finance minister Nirmala Sitharaman had urged corporates to “join in a big way" to push up India's growth trajectory, especially as the country aims to become a developed nation by 2047.

In its latest May bulletin, the Reserve Bank of India said, “A strong revival in private investment has to become the most important factor driving growth in the years to come, especially as public finances consolidate." Earlierin February too, the central bank had called upon India Inc. to lead the way in capex.

The Adani Group’s capital requirement for the next 10 years is $100 billion, Singh said, adding the group has secured the necessary funding. “68% of this is via own capital," Singh said. “The equity-debt funding gap will be further narrowed in FY25 in which our own capital will be 88%."

The Adani group has been reducing its leverage ratio since American short-seller Hindenburg Research last year accused it of stock price manipulation, leading to a rout in its stock prices and making it difficult for the group to raise debt. The group had denied all charges. The leverage ratio has come down from 3.3 times in FY23 to 2.2 times in FY24. The group wants to bring further lower this ratio, Singh said.

Adani houses its renewable energy business in listed Adani Green Energy and its ports business in Adani Ports and Special Economic Zone. Adani Green Energy plans to ramp up its renewable energy capacity to 50 GW by 2030 from 10.9 GW at present. This will be primarily through solar and wind energy projects, paired with pumped hydro storage projects.

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The group will also refinance about $3-4 billion of maturing debt in FY25, Singh said. Adani Airports Holdings, a non-listed company housed under group flagship and incubator Adani Enterprises, will be listed by FY28, he added.

FY25 will be more of an “asset completion year" than venturing into newer spaces, Singh said. During the year, the company expects to fully operationalize its new copper smelter at Mundra, complete the construction of its Navi Mumbai airport and operationalize about 6-7 gigawatts of fresh renewable energy capacity, he said.

A Mint report on 1 April citing data from the Centre for Monitoring Indian Economy (CMIE) said a total of ₹11.3 trillion worth of new projects were announced across India in the March quarter, twice the figure in the December quarter. However, FY24 ended with ₹27.1 trillion worth of new projects being announced, down nearly 31% after two successive years of sharp growth.

At the same time, private capex has not been secular across sectors, with a few such as heavy industries, drawing more attention than the rest, Amitabh Malhotra, head of global banking, HSBC India told Mint in a recent interview.

“We are seeing a lot more activity in the heavy industry sectors, whether it is roads, airports, renewables, logistics, highway, or port development. Even in the steel sector, most of the major players are going through capacity expansion," said in an interview. Asked if capex is limited to sectors that are being incentivized or pushed by the Centre, Malhotra said from a policy perspective, a lot of these growth sectors are where the government has come out with some positive initiatives and financial support.