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Indian billionaire Gautam Adani pictured in Ahmedabad in 2014. Photo: Reuters

India’s Gautam Adani: is Asia’s richest man still ‘a goose that lays golden eggs’ despite a debt-fuelled spending spree?

  • Thanks in part to his close ties with Indian PM Narendra Modi, Gautam Adani has grown a business empire that makes him the third richest man on Earth
  • His Adani Group’s rise has been meteoric. But will US$28.8 billion in debts send it crashing back down, as analysts warn it’s ‘deeply overleveraged’?
Penny MacRaein New Delhi
Self-made Indian tycoon Gautam Adani’s wealth has skyrocketed as he backs Prime Minister Narendra Modi’s infrastructure and green energy push, but amid the Adani Group’s aggressive expansion, analysts have questioned the speed and prudence of some of his investments.
For the last few years, Adani’s ports-to-energy group – India’s third-largest conglomerate after the Tata Group and Mukesh Ambani’s Reliance Industries – has been on a debt-fuelled deal-making spree. Now, warning lights are flashing over whether 60-year-old Adani’s aggressive empire-building is sustainable.

Fitch Group’s debt-research arm CreditSights called the Adani Group “deeply overleveraged” in a strongly worded report last week, calculating its debt at US$28.8 billion. The group’s “quick rate of growth and high levels of leverage are causing us, as well as other clients and other investors, to have reservations”, wrote analysts Lakshmanan R, Rohan Kapur, and Jonathan Tan.

The logo of the Adani Group is seen on one of its buildings on the outskirts of Ahmedabad, India. Photo: Reuters

The group “has a wonderful track record of churning out strong and stable enterprises and boasts a portfolio of solid infrastructure assets,” CreditSight said, adding that Adani’s “entrepreneurial vision is impressive”. But debt, it warned, could be his empire’s downfall.

In what it described as the “worst-case scenario”, CreditSight said “overly ambitious debt-funded growth plans could eventually spiral into a massive debt trap”, which may lead to parts of the group falling into financial distress or defaulting – and weighing heavily on India’s economy given their sheer size.

None of these concerns has put a brake on Adani’s ballooning fortune, however, which this week vaulted him into third place globally in the Bloomberg Billionaires Index, behind Tesla’s Elon Musk and Amazon’s Jeff Bezos. Adani, whose wealth Bloomberg pegged at US$143 billion, is the first Asian to break into the top-three rankings. Bloomberg said Adani has added US$66.2 billion to his wealth in 2022 alone, making him the only member of the index’s top 10 not to see their wealth drop this year.

What’s behind Adani’s gravity-defying ascent?

Adani’s meteoric rise has been driven by the soaring share prices of his namesake group’s seven listed companies – as his family own up to 75 per cent of each. The combined market value of those companies rose tenfold over the past three years to US$220 billion.


Equity research house Equitymaster said investors have been in a “frenzy” over Adani stocks, partly due to investors suffering from “FOMO” (fear of missing out) while others “probably think he is too big to fail now”.

At the same time, it said the group’s companies are trading “at valuations far higher than the industry average, indicating they are highly overpriced … even if you factor in their phenomenal growth, leadership status, or the fact the businesses are aligned” with Prime Minister Modi’s nation-building vision.

Adani has gone from college dropout to India’s No 1 for port and airport infrastructure; private thermal power generation; gas distribution; and solar power – to name but a few. His group is now diversifying into media, data centres, digital technology services, cement and other areas at breakneck speed.

Hardly a week goes by without Adani announcing a deal or an expansion that CreditSights said is “primarily supported with debt”. The group is “increasingly venturing into new and/or unrelated businesses, which are highly capital-intensive,” the report said, a decision that “raises concerns regarding spreading execution oversight too thin”.

In the last few months, Adani’s purchases have included Chhattisgarh-based thermal-power plant operator DB Power for US$879 million, Israel’s Haifa port for US$1.18 billion and construction giant Holcim’s India units for US$10.5 billion.

Adani also announced plans for a US$5.2 billion aluminium refinery in eastern India. In the 12 months to May, he spent at least US$17 billion on acquisitions, according to Bloomberg.

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While these acquisition announcements have become almost routine, the group roused controversy last week when it launched a hostile bid for India’s first 24-hour news channel, NDTV.


The bid ties in with Adani’s recent media moves and, with no deep-pocketed white knight for the outlet in sight, it’s expected to succeed. But the business mogul’s close ties to Modi have raised concerns about whether NDTV will be able to maintain its editorial independence.

Since Modi’s Bharatiya Janata Party took power in 2014, Indian broadcasters have increasingly toed the government line. But NDTV still has a reputation for impartial reporting – leading opposition Congress party spokesman Jairam Ramesh to condemn Adani’s takeover bid as a “brazen move to control and stifle any semblance of an independent media” being carried out by the prime minister’s “khaas dost” (special friend).

Adani is from Modi’s home state of Gujarat and has been one of the Hindu nationalist leader’s staunchest supporters since his earliest days as the state’s chief minister, and on whose watch the deadly anti-Muslim riots of 2002 occurred.

By the time he had befriended Modi, Adani was already a successful businessman, and grew his net worth to an estimated US$7 billion by 2014. But it was only after the BJP leader became prime minister that Adani’s fortunes really took off.

Modi famously travelled to New Delhi in an Adani private jet following his 2014 election win, underlining the pair’s closeness.

And their relationship has endured. Adani’s pivot to green energy aligned perfectly with Modi’s quest to reduce fossil-fuel dependence, paradoxically sending the wealth of a man once known as India’s “King of Coal” soaring. His coal assets have assumed renewed importance, however, amid recent market turmoil following Russia’s invasion of Ukraine.

Adani aims to become the world’s biggest renewable energy producer by 2030 with some US$70 billion in green-energy infrastructure investments. The clean-power focus has made Adani Green Energy his most valuable company by market capitalisation.


Investors in Adani Green have reportedly seen profits of 7,850 per cent over the past five years, with shares in the company delivering returns of 73 per cent this year alone.

But there’s a downside: the company has the second-worst debt-to-equity ratio in Asia at 2,021 per cent, only slightly better than China’s Datang Huayin Electric Power Co., which has a ratio of 2,452 per cent.

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The Adani Group hasn’t offered a response to the CreditSight report. Shares in the group’s companies stumbled slightly after the report’s release, but have since rallied strongly.

“Our scale, our diversified business, and our track record of performance positions us very strongly to continue to perform well in a variety of market conditions,” Adani told shareholders in July, emphasising that the group’s success “is based on its alignment with the India growth story.”

‘A goose that lays golden eggs’

Politicians and market-watchers have over the years raised worries about the Adani Group’s debt load, complex shareholding structures and the unusually scant number of analysts providing research on its stocks. Lenders appear confident the group can manage its debt-heavy balance sheet though. “They do have capital backing,” said Pramod Kumar, investment banking head at Barclays India.

Importantly, the Adanis can say they’ve never defaulted on a loan. The group’s synchronicity with government development policies is another confidence-booster, as is its ability to attract big-ticket investors such as the Abu Dhabi-based International Holding Company.

While CreditSight said it takes “comfort in the group’s solid relationships with both domestic and international banks”, the Congress party has accused the government of “pressuring banks” to grant the group loans, putting both those financial institutions and the economy at “colossal risk”.

[Adani] has remarkable conviction as an entrepreneur and the capacity to expand after taking a calculated gamble
Deven Choksey, KRChoksey Investment Managers

Ventura brokerage in July noted the group’s “huge capex” (capital expenditure) plans and said “net debt is expected to increase considerably”. But it also said it was confident about Adani’s talent for implementation and ability to unlock asset value, calling his group “a goose that lays golden eggs”.

Adani’s surge in wealth has left fellow Indian corporate titan Mukesh Ambani far behind. Ambani, another Gujarati, was the richest Indian for 14 years before being dethroned by Adani.

He’s now 9th richest globally, worth US$94 billion, according to Bloomberg. Ambani’s wealth has grown sharply, too, from 2014 when he was worth around US$24 billion. His businesses also dovetail with Modi’s emphasis on infrastructure.

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But the investment style of Ambani, whose energy-to-telecoms group Reliance Industries Ltd boasts impressive credit metrics, is seen as more conservative than Adani’s.

Deven Choksey, general manager of KRChoksey Investment Managers, described Adani as a businessman who “has remarkable conviction as an entrepreneur and the capacity to expand after taking a calculated gamble”. Adani in 2013 summed up his philosophy as: “Either you sit on a pile of cash or continue to grow.”

CreditSight said the group right now “enjoys a strong relationship” with Modi’s government and is benefiting from “policy tailwinds”. As long as that favourable configuration continues, investors look set to bet its shares will keep delivering rich returns too.