Indian billionaire Gautam Adani couldn’t have asked for a better start to September. A day after he became the world’s third-richest third-richest Bloomberg Adani Becomes World’s Third Richest Trailing Only Musk, Bezos Read more person, thanks to an incredible surge in the value of his seven listed companies, he had yet another reason to rejoice.

The National Stock Exchange announced that Adani Enterprises Ltd (AEL), the flagship of his ports-to-data-centres empire, would soon be added to the Nifty 50 index, a key equity benchmark. AEL shares—which have doubled in value since January, compared to a flattish Nifty 50—promptly hit an all-time high.

AEL, now worth nearly Rs 4 lakh crore (US$50 billion), is only the second Adani Group company, after Adani Ports & Special Economic Zone Ltd, to make it to the index. “Now the inflows into the stock will be bonkers,” says a senior executive at one of India’s largest mutual-fund houses. “It can be as high as US$300 million [in the days before and after the inclusion].” They and others quoted in the story requested anonymity since they are not authorised to speak to the media.

AEL, which is India’s largest coal trader, began the group’s journey in 1988. And it built each of the other six listed Adani companies. More crucially, AEL remains the central piece of the dizzying puzzle Gautam Adani is assembling. Even if two other Adani firms—power utility Adani Transmission Ltd and city-gas-distribution company Adani Total Gas Ltd Adani Total Gas Ltd The Ken Hype in the Adani Total Gas pipe Read more —are now larger by market capitalisation.

Almost all of the Adani Group’s new ventures—from airports and metals to petrochemicals and media—are housed in AEL. So, naturally, their fortunes are yoked to AEL’s financials. But AEL’s businesses, old or new, are not the kind that spew a lot of cold, hard cash. In fact, AEL’s consolidated cash flow from operations in the year ended March 2022, at Rs 1,400 crore (US$175 million), was the third lowest among the publicly listed Adani companies, shows The Ken’s analysis.

But AEL’s consolidated capital expenditure shot up nearly 3X to Rs 11,650 crore (US$1.5 billion) in the same period, according to its annual report. This means debt—oodles of it, in fact—is the connective tissue between AEL’s cash-poor businesses and its expensive ambitions.

AEL is the second-most-leveraged company in the Adani Group, according to a recent report by CreditSights, an arm of ratings and data provider Fitch Group. Its net debt—gross debt minus cash—of over Rs 40,000 crore (US$5 billion), as of March 2022, was more than 10X its Ebitda—second only to clean-power producer Adani Green Energy Ltd.