Bernstein said many global funds had stayed away from Adani stocks while awaiting clarity on the US proceedings, leaving most group companies under-owned despite sharp recoveries from their lows
Global brokerage Bernstein believes the worst may be over for the Adani Group, as concerns around leverage, promoter share pledges and access to overseas capital have eased significantly after recent developments in the US legal cases involving the conglomerate.Bernstein said the group has weathered two major crises in the last four years — the January 2023 Hindenburg short-seller report and the US SEC-DoJ related developments that began in November 2024.“With the latest news from the US, both seem to be behind,” the brokerage said in its report titled “India Infra: Adani Group – The ‘Hard-Bank’...”, adding that “a key overhang has been removed” after the SEC case was settled and US prosecutors moved to drop charges against the group.Fund hesitationBernstein said many global funds had stayed away from Adani stocks while awaiting clarity on the US proceedings, leaving most group companies under-owned despite sharp recoveries from their lows.However, the brokerage said the group’s “execution prowess” and ability to build large infrastructure assets at scale had never been seriously questioned. “The core strength — execution at scale to beat inefficient govt. run businesses,” the report said.The brokerage said the group has three structural advantages – access to large land parcels, ability to gain market share from government-run businesses, and execution efficiency in large-scale projects. Adani Green Energy’s roughly 250,000-acre renewable energy land bank with transmission connectivity and Adani Ports and Special Economic Zone’s dominance in container traffic as examples of these strengths.Bernstein said the group’s businesses continue to enjoy strong operating metrics because of scale and execution. “Most group businesses have high margins: Ports-70 per cent, Power-40 per cent, Green-80 per cent etc,” the report said.Bernstein maintained an “Outperform” rating on Adani Ports and Special Economic Zone and Adani Power, citing strong market positioning and growth visibility. It retained a “Market-Perform” rating on Ambuja Cements, saying operational performance continues to lag peers despite cheaper valuations.The brokerage also maintained an “Underperform” rating on Adani Green Energy, saying valuations remain expensive even after correcting from pre-Hindenburg levels.Debt ExpansionOn debt, Bernstein said net group debt has increased by around ₹1 trillion since September 2024 due to aggressive capital expenditure, particularly in renewables and infrastructure expansion. Still, it said earnings growth has remained strong, with group EBITDA rising at a 22 per cent CAGR between FY23 and FY26, supported by capacity additions across businesses.The brokerage said that the group’s net debt-to-EBITDA ratio, which had peaked at 4.4 times during the Hindenburg episode, fell to 2.7 times by September 2024 before rising again to 3.9 times by March 2026.“Net debt/EBITDA while lower than that during short seller event… has gone up from the US event,” the report said, while adding that leverage remains below the levels seen during the 2023 crisis.Bernstein also said concerns around pledged promoter shares, which were one of the biggest fears during the Hindenburg episode, have reduced sharply. “There has been a dramatic drop across companies since 2022 and is now negligible across the group,” the report said.Further, overseas fundraising options for the group could reopen as legal uncertainty eases. It noted that after the Hindenburg and US legal developments, the group relied more heavily on PSU banks and NBFCs while raising very little dollar debt. “With that now more or less behind the group, we can see share of $ funding rising again going forward,” Bernstein said.Bond yields for several Adani entities have fallen sharply and are now below India’s five-year government bond yield levels.Published on May 22, 2026
