Top Domestic Investors Show Strong Interest in Adani Power's Largest Onshore Bond Issue

Adani Power has successfully raised Rs 7,500 crore through a non-convertible debenture (NCD) issue. This attracted significant interest from prominent domestic investors such as ICICI, Axis, Kotak, Nippon, Tata, and Invesco. A diverse range of mutual funds, banks, insurers, and other domestic institutions participated in the offering, with a total of 17 institutions involved.

Representative image

One investor noted that the company's operations remain robust despite recent developments. Another investor mentioned that these events are unlikely to cause significant harm to the company or its group. The funds raised from the NCD issue are expected to be used for refinancing existing debts and general corporate purposes.

Investor Confidence and Financial Stability

Market analysts attribute the strong investor interest to Adani Power's reliable cash flows. Approximately 90% of its operating capacity is secured under long-term power purchase agreements (PPAs), ensuring stable earnings and revenue. Enhanced fuel sourcing, efficient logistics, and consistent utilisation levels have further strengthened cash generation.

SBI Mutual Fund invested Rs 2,500 crore, while ICICI Bank contributed Rs 1,100 crore. Axis Bank invested Rs 1,000 crore, and Kotak MF along with ICICI MF committed around Rs 500-600 crore each. Mutual funds are believed to have driven most of the demand for this offering.

Expansion Plans and Financial Metrics

Adani Power is India's largest private thermal power producer with an operational capacity of about 18 GW. The company aims to increase this capacity to 42 GW by FY32. Its net debt-to-EBITDA ratio is approximately 1.5 times, significantly lower than state-run NTPC's ratio of around 5 times and private peers like Tata Power and JSW Energy at about 4-5 times.

Analysts highlight the swift conversion of capacity into long-term PPAs and relatively low leverage as major advantages for Adani Power. Operating profit is anticipated to more than triple over the next five years. EBITDA is projected to grow from approximately Rs 21,000 crore currently to around Rs 75,000 crore by FY30 due to capacity additions and efficiency improvements.

Global Ratings and Future Outlook

Global rating agencies Moody's and Fitch have recently revised their outlook on Adani group entities to stable. They cited limited immediate impact from the ongoing US investigation as a reason for this revision. Fitch stated in November that risks associated with the probe are manageable in the short term.

The company's strong financial position and strategic expansion plans indicate a promising future despite external challenges. Investors remain confident in Adani Power's ability to maintain its growth trajectory while managing potential risks effectively.

With inputs from PTI