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‘Adani Group’s Cash-Flow Generation Is Underappreciated’

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Singapore: M&G Investments (Singapore) Pte. has said that billionaire Gautam Adani’s group does not get enough appreciation for its cash-flow generation ability.

In an interview with news agency Bloomberg, Vikas Pershad, a Singapore-based fund manager at M&G, said that the businesses that Adani is incubating and operating in are actual businesses that generate cash.

He added that there are questions about opacity, lack of disclosures and valuations, but it is trickier because the business the group is operating will grow if India grows.

A few months back, Fitch Group firm, CreditSights, called the group “deeply over-leveraged,” pegging the conglomerate’s total debt at USD 28.80 billion.

Adani challenged the figure, and subsequently, the ratings and research company softened the tone of its observations. However, it still maintained that the group indeed has too much debt.

Prershad said that today the group is about 6 per cent of India’s market cap and, in most key benchmarks, has about 500 to 700 basis points of exposure.

He added that investors, whether they like it or not, do need to pay attention to what the company is doing.

Shares in Adani Enterprises have surged more than 130 per cent year-to-date, giving it a market value of about USD 56 billion. India’s benchmark NSE Nifty 50 Index — which added the stock in September — is up 5.3 per cent in 2022.

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