Debt Ratio At Billionaire Gautam Adani's Green Firm Needs 'Watching': Report

A key financial metric of Adani Green Energy Ltd. is flashing signs of concern as its billionaire owner takes on more debt to become a renewable energy giant. 

The Gautam Adani owned company's debt-to-capital ratio has soared to 95.3%, a level that is on the "higher side" for a private company, according to Sharon Chen, an analyst at Bloomberg Intelligence. The company's capital expenditure plans and its funding are other factors that need a close watch, Chen added.

"We would be more comfortable looking at a 70% level or up to 80% for a company in a growth phase," she said. "Adani Green warrants watching closely."

Asia's richest man has pledged to invest around $70 billion in the entire green energy supply chain by 2030. 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.

To be sure, Chen said 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, with Asia's second-worst debt-to-equity ratio of 2,021%.

The company's 4.375% September 2024 dollar bonds are trading near their lowest level in about a month and are set to decline for a second straight week. The latest weekly losses will also be the biggest since the five days to June 24, according to data compiled by Bloomberg. 

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