(Bloomberg) -- A key financial metric of Adani Green Energy Ltd. is flashing signs of concern as its billionaire owner takes on more debt to become a renewable energy giant.
The Gautam Adani owned company’s debt-to-capital ratio has soared to 95.3%, a level that is on the “higher side” for a private company, according to Sharon Chen, an analyst at Bloomberg Intelligence. The company’s capital expenditure plans and its funding are other factors that need a close watch, Chen added.
“We would be more comfortable looking at a 70% level or up to 80% for a company in a growth phase,” she said. “Adani Green warrants watching closely.”
Asia’s richest man has pledged to invest around $70 billion in the entire green energy supply chain by 2030. His conglomerate aims to become the world’s biggest renewable power producer by the end of this decade. That makes Adani a key player in India’s quest to become carbon net-zero by 2070.
To be sure, Chen said the Adani Group has a track record of getting external investors to put in money and that overseas companies have a lot of interest in India. “Adani is in that sweet spot,” she said.
Adani’s Empire Is ‘Deeply Overleveraged,’ CreditSights Warns
Still, Adani Green is one of the most leveraged companies in the tycoon’s empire, with Asia’s second-worst debt-to-equity ratio of 2,021%.