Adani's green plans may face a funding squeeze

Adani Group's ambitious plan to invest more than $100 billion (~₹85,000 crore) in the energy transition business and scale up its renewable energy operations over the next decade could face delays following the indictment of the conglomerate and its founder-chairman Gautam Adani by the US Department of Justice and the Securities and Exchange Commission, according to analysts.

The majority of the investment is geared towards building facilities to manufacture electrolysers for producing green hydrogen, wind power turbines, and solar panels, besides establishing solar parks.

Adani Group's renewable energy arm Adani Green Energy (AGEL), also India's largest renewable energy company, follows a debt-fuelled growth model with a 70:30 debt-equity structure like most peers.


"Funding channels will inevitably squeeze across the Adani Group, with creditors likely to reduce or limit their group-wide exposure," said research firm CreditSights, adding Adani Green has the weakest liquidity and credit fundamentals in the conglomerate, and given the US indictment is centred on AGEL, its fundraising plans may hit a roadblock.

AGEL has a short-term debt of about $2 billion, largely in the form of project loans, with refinancing emerging as the biggest concern in the near term.

CreditSights expects some contagion towards other Adani sister entities, though the impact should be more manageable for Adani Ports and SEZ given the larger more established nature of its port assets, as well as its materially stronger credit metrics, stable earnings, and free cash flows.