Adani Group poses no significant downside risk to Indian banks: CLSA

The Adani Group poses no "significant downside risk" to Indian banks, global broking and research firm CLSA said on Thursday, as reported by the Economic Times (ET). It said that the total exposure of Indian banks is less than 40 per cent of the group's total debt. 

The consolidated debt of the group was pegged at Rs 2.1 trillion. 

Within this 40 per cent, the exposure of private banks is below 10 per cent and lenders like ICICI Bank and Axis Bank have indicated that they have largely financed assets with strong cash flows, such as airports or ports. 

"PSU banks do have material exposure (30 per cent of group debt) but this debt has not increased in the past three years. Most of the incremental funding to the group for new businesses and acquisitions has come via overseas sources," it said. 

"For PSU banks, the exposure is more meaningful at 0.6 per cent of loans and 5 per cent of FY24 net worth," the brokerage added. 

CLSA said that even though the group's bank debt has increased 25 per cent in the past three years, the share of bank debt in overall group debt has reduced. Large acquisitions like Ambuja Cements and ACC have been largely funded by foreign banks. 

This comes just days after a Januray 24 report by Hindenburg Research questioned how the Adani Group has used offshore entities in offshore tax havens such as Mauritius and the Caribbean Islands. It said that key listed Adani companies had "substantial debt" which has put the entire group on a "precarious financial footing".

On Wednesday, Adani called the report baseless. The group added that it will sue the US-based research group. 

The report coincided with Adani's $2.5 billion secondary share sale which will go live on Friday. The anchor portion of the issue saw participation from Maybank Securities and Abu Dhabi Investment Authority among others on Wednesday.