May 30, 2024 02:22 PM IST
Snowcap Research said ambitious generation predictions and concealed accounting add-backs likely inflated Adani Green’s crucial Run-rate EBITDA metric.
Activist investment firm Snowcap Research published a report on Adani Green Energy Ltd focussing on findings related to operational performance, project returns, funding concerns, run-rate EBITDA and related party merchant power sales. The advisory firm said in its analysis that ambitious generation predictions and concealed accounting add-backs likely inflated Adani Green’s crucial Run-rate EBITDA metric.
Read more: Rekha Rakesh Jhunjhunwala earns ₹224 crore dividend from portfolio in March quarter
This was also concealed from investors, the report said, claiming, “This includes interest earned on loans, one-off late payment surcharge, and non-cash accounting gains. Not only is this seemingly inconsistent with Adani Green’s reporting of its headline EBITDA number, we believe it is nonsense to include one-off items and non-cash accounting gains in a “run-rate” metric”.
Unlock exclusive access to the latest news on India’s general elections, only on the HT App. Download Now! Download Now!
Read more: Sunil Mittal recounts a 2018 assurance from PM Modi that helped Airtel ‘survive’: ‘Government will not take sides’
As per Snowcap Research, Adani Green’s projects have yielded an average unlevered return of just 11–12% over the last three years while the firm said that it could generate up to 17% in attractive returns on its projects which will be more than its competitors.
Read more: Adani Total considering building more plants in India for LNG import
“Adjusting for accounting gimmicks, we estimate that Adani Green has achieved an average ~11-12% Return on Capital on projects completed in the past 3 years. For context, Adani Green’s cost of debt is 9.5%,” Snowcap Research noted.
The research said that Adani Green’s high debt payment load and declining project returns resulted in minimal free cash flow in recent months, adding, “By our own modelling, we estimate Adani Green can meet just 50% of its 50GW target funding requirement by 2030 – even with the announced equity injection from promoters.”
Elevate your career with VIT’s MBA programme that has been designed by its acclaimed faculty & stands out as a beacon for working professionals. Explore now!
Discover the complete story of India’s general elections on our exclusive Elections Product! Access all the content absolutely free on the HT App. Download now!
Get latest news on Education along with Board Exam, Competitive Exam and Exam Result at Hindustan Times. Also get latest Job updates on Employment News
- ABOUT THE AUTHOR
Follow the latest breaking news and developments from India and around the world with Hindustan Times’ newsdesk. From politics and policies to the economy and the environment, from local issues to national events and global affairs, we’ve got you covered.
