Surging share prices of Gautam Adani's companies have helped make him the world's second-richest person. The bond market isn't quite as enthusiastic.
Stocks of firms in his Indian business empire -- spanning ports to gas distribution and coal mining -- have jumped in part on soaring energy prices. Adani Ports & Special Economic Zone Ltd. has climbed 29% in 2022 and hit a record this week, while shares in some of his other companies have surged more than 1,000% in the past two years.
But in the debt market, Adani Ports' dollar bonds have dropped more than Indian peers on concern about the group's debt, and its notes due in August 2027 fell to an all-time low this week, Bloomberg-compiled prices show. Bonds of group companies including Adani Green Energy Ltd. and Adani Transmission Step-One Ltd. also mostly underperformed the broader Indian market.The diverging moves suggest that high debt poses risks to Adani's success story that saw his net worth, as measured by the Bloomberg Billionaires Index, shoot up to trail only Elon Musk's.The conglomerate's rapid expansion into areas such as renewable energy and media has left it with leverage that Fitch Group unit CreditSights described as elevated and "a matter of concern."
"Equity investors are bidding up the shares, giving a premium for the steep growth targets in place," said Hemindra Hazari, an independent research analyst based in Mumbai. "Debt holders are getting worried about the high leverage." Adani Group declined to comment when asked about its dollar bonds underperforming Indian and regional peers. The conglomerate in the past has downplayed concerns about the high debt levels, saying its credit metrics have improved in the past few years and it has received equity infusions from global investors.
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