A crucial financial indicator for Adani Green Energy Ltd. is raising red flags as its billionaire owner piles on additional debt to become a powerhouse in the renewable energy sector.
According to Sharon Chen, a Bloomberg Intelligence analyst, the debt-to-capital ratio of the Gautam Adani-owned company has risen to 95.3%, which is on the "upper side" for a private corporation. Other elements that require strict attention include the company's financial and capital expenditure plans, according to Chen.
"For a company in a growth phase, we would be more comfortable looking at a 70% level or up to 80%," she said. Adani Green is worth paying particular attention to.
By 2030, Asia's wealthiest man has committed to investing roughly $70 billion throughout the whole green energy supply chain. His conglomerate aims to become the world's biggest renewable power producer by the end of this decade. That makes Adani a key player in India's quest to become carbon net-zero by 2070.
Chen confirmed that the Adani Group has a history of attracting outside investors and that foreign businesses are very interested in India. Adani is right where it should be, she remarked.
However, Adani Green, which has Asia's second-worst debt-to-equity ratio of 2,021%, is one of the most leveraged businesses in the tycoon's empire.
The price of the company's 4.375% September 2024 dollar bonds is close to its lowest level in roughly a month, and it is expected to continue falling for a second week. According to data gathered by Bloomberg, the most recent weekly losses will also be the largest since the five days leading up to June 24.
