Adani Green Energy’s Debt-to-capital Ratio Raises Concerns

Sharon Chen, an analyst at Bloomberg Intelligence says that Adani Green Energy’s debt-to-capital ratio has soared 95.3 per cent, which for a private company is on the “higher side”

A key financial metric of Adani Green Energy has emerged as a point of concern as the company takes on more debt to become a renewable energy giant, Bloomberg news reported.

Sharon Chen, an analyst at Bloomberg Intelligence says that Adani Green Energy’s debt-to-capital ratio has soared 95.3 per cent, which for a private company is on the “higher side.”

“The company’s capital expenditure plans and its funding are other factors that need a close watch,” Chen added.

For a company in the growth phase, Chen said that a 70 per cent level or up to 80 per cent would be more comfortable to look at.

Chen added the Adani Group has a track record of getting external investors to put in money and that overseas companies have a lot of interest in India. “Adani is in that sweet spot,” she said.

Still, Adani Green is one of the most leveraged companies in the tycoon’s empire the report stated, with Asia’s second-worst debt-to-equity ratio of 2,021 per cent.