Jefferies said that Total Global issued a release that it is buying 20% stake in Adani Green from the Adani group for an investment of USD 2.5bn, including a previous JV arrangement. Adani Group management said in 2020 that they will reduce promoter pledges in Adani Ports to negligible levels in 2021-22. Deal proceeds could potentially be used for this, which would be a re-rating trigger if it happens.

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Adani Green and Total entered into an agreement in April 2020 to form a 50:50 JV for 2148 MW solar assets at USD 2.3 bn EV. In October 2020, additional 205 MW assets were transferred to the JV at USD 0.2 bn EV. Jefferies are awaiting clarity on equity investment within USD 2.5 bn for the 20% stake and also timing of the actual payment. Adani Green has 2.9 GW installed capacity, 3.3 GW under construction and a Letter of Award (LOA) for 8 GW at Rs2.92/ unit.

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38.8% of the promoter's 63.65% holding in Adani Ports is currently pledged:

Investors have been concerned by promoter pledges as it points to the possibility of Adani Port's cash flows being needed by group companies. Inter-corporate deposits have been a past issue. However, management reiterated multiple times in 2020, that pledges cannot be a part of the permanent capital structure. Their aim is to reduce it to negligible levels in 2021-22.

Market share gains should continue with Krishnapatnam Port (KPCL) ramp-up:

9M FY21 volume of Adani Ports is up 5% YoY, as it has gained market share on existing ports and added volumes from the KPCL acquisition. Operationally, it is only moving from strength to strength with the rise in its East Coast volumes helping it diversify geographically. Profit CAGR should be 17% in FY21E-23E and market share should rise from 17% to 23% in FY20-23E. Reduction in pledges is an additional rerating trigger.