NEW DELHI: Gautam Adani’s rise among global billionaires is nothing but surreal. In just a few years, from being a regular billionaire, he has now risen to become the world’s third-richest individual, a feat that no Indian or Asian has ever achieved.
According to the Bloomberg Billionaire Index, Gautam Adani’s wealth stood at $141 billion on Friday. There has been a phenomenal growth of his wealth. Adani’s wealth was less than $10 billion when Covid-19 first became a global phenomenon in March 2020.
After trailing behind Mukesh Ambani for a considerable period of time in the billionaires’ list, in February 2022, he overtook the RIL chairman and cemented his position as Asia’s richest person.
A decade back in 2012 when Ambani’s wealth was pegged at 18.7 billion, Adani’s fortune stood at $3.1 billion, as per data provided by IIFL Wealth Hurun India Rich List. Adani, now, is $50 billion wealthier than Ambani.
It wouldn’t be surprising if the Ahmedabad-based business tycoon, whose empire stretches from power generation to FMCG, overtakes e-commerce giant Amazon chief Jeff Bezos to become the world’s second-richest person, as the gap between the two may come down to single digit as early as next week.
Adani has added $65 billion to his wealth so far in 2022, more than any other billionaire around the globe, while Bezos’ fortune has shrunken by $45.5 billion to $151 billion.Tesla and SpaceX chief Elon Musk remains the world’s richest with a net worth of $241 billion.
The meteoric rise
This meteoric rise in Gautam Adani’s wealth is attributed to the confidence investors are showing in the conglomerate’s seven listed stocks. In the past 5 years or since few listings in 2018 till date, five Adani stocks have gained anywhere between 1200% to 7992%. The pace of growth has been sharper in the past two years and in the past six months alone, the market capitalisation of his listed entities has more than doubled to over Rs 20 lakh crore.
In all the seven listed Adani companies, the promoter shareholding is 60% or more.Equitymaster, an equity research firm, in a recent note 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”.
However, it also cautioned that 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.
A few other analysts, in hush hush tones, also spoke about the Group’s rising debt level and the exorbitant valuation (except for Adani Ports & SEZ and Adani Wilmar), all the Adani stocks are commanding. A senior analyst at a brokerage firm said that there is widespread surety among investors that Adani Group has become too big to fail and the promoter’s close proximity with India’s ruling party gives it a unique leverage.
Gautam Adani’s close proximity to PM Modi has been often talked about. While Adani was already a successful entrepreneur before PM Modi in 2014 took the centre stage in national politics, his wealth in the past 8 years has grown by 20- times from $7.3 billion in 2014 to about $140 billion now.
“In many sectors, where the Central Government wanted India to be self-reliant or favour privatisation, Adani Group was a major beneficiary. Take for example, the government’s push for solar energy which started around 2015. It was around the same time when Adani Green was set up and today Adani Green is the country’s largest renewal player. Similar examples can be seen in leasing Airports and winning infrastructure contracts,” said the senior analyst on condition of anonymity.
On an expansion mode
In more recent times, the Group has escalated its speed when it comes to entering new businesses. It has acquired Holcim’s controlling stake in Ambuja Cement and ACC Limited for $10.5 bn, thereby becoming the nation’s second largest cement maker virtually overnight, participated in 5G spectrum auctions to boost its data centre business, plans to set up alumina refinery and iron ore plant in Odisha that could cost over Rs 58,000 crore among other investments.
However, Adanis’ most talked about acquisition effort came last week when it attempted a hostile takeover of New Delhi Television Ltd (NDTV). The Roys, founder-promoters of NDTV, are putting on a fight to retain the media outlet.These acquisitions and expansions, which are mostly debt funded, have become a cause for concern. CreditSights in a recent report said that Gautam Adani’s ports-to-power conglomerate is “deeply overleveraged,”.
“In the worst-case scenario, overly ambitious debt-funded growth plans could eventually spiral into a massive debt trap, and possibly culminate into a distressed situation or default of one or more group companies. Overall, we remain cautiously watchful of the Group’s growing expansion appetite, which is largely debt-funded,” the Fitch Group unit said.
Talking about high debts, the Group’s acquisition of Holcim’s India businesses is expected to add another Rs 40,000 crore to the Group’s debt, taking it to nearly Rs 2.6 lakh crore, said an analysis by Credit Suisse.
The Gautam Adani-led Group has seen its debt levels increase over the past five years from Rs 1 lakh to Rs 2.2 lakh crore as of March 2022. However, analysts at Credit Suisse also pointed out that while debt levels may have gone up, the cash flows for the Group have also grown steadily, with more assets coming on stream and becoming operational. As such, the net debt/Ebitda at Group level has come off to around 5x in FY22, compared with a little less than 7.5x in FY16.