Adjusted EBITDA: What Gets Excluded and Why | Quick ₹eads

by Karnivesh | 16 February 206

Adjusted EBITDA strips away distractions to reveal a company's true operational muscle, especially in India's fast-evolving markets. Picture a bustling boardroom in Mumbai where executives highlight this metric to investors, smoothing over one-off hits for a cleaner growth story. It's become a staple in earnings calls, with Indian firms adjusting for everything from forex swings to ESOP costs.

Core Exclusions: Building the Base

Start with EBITDA earnings before interest, taxes, depreciation, and amortization which ignores capital structure and non-cash wear. Adjusted EBITDA goes further, adding back non-recurring items to spotlight recurring profits. Common exclusions: one-time legal fees, restructuring charges, asset sale gains/losses, and stock-based pay.

Why? These don't reflect daily grind. For ABC Ltd., a software firm, EBITDA hit ₹25 lakh after backing out interest (₹2 lakh), taxes (₹4 lakh), D&A (₹4 lakh). Adjustments for ₹1.5 lakh stock comp and ₹1 lakh restructuring pushed it to ₹27.5 lakh, showing core strength. In India, where volatility reigns, this normalization aids comparisons.

Adani Enterprises — The Incubation Playbook at Work

Adani Enterprises’ FY25 results illustrate how adjusted metrics can radically alter the narrative. On a reported basis, consolidated EBITDA rose a healthy 26% to ₹16,722 crore, up from ₹13,237 crore, largely driven by the airports and renewable energy platforms. However, the headline Profit Before Tax surged a much sharper 113% to ₹10,479 crore, inflated by a ₹3,946 crore exceptional gain from the partial divestment of a 13.5% stake in Adani Wilmar Limited.

When investors strip out this one-off and focus on adjusted EBITDA, the story shifts squarely to incubation execution. The ANIL (Adani New Industries) ecosystem delivered 108% EBITDA growth to ₹4,776 crore, underpinned by the sale of 4,263 MW of solar modules, up 59% YoY. Further adjusting for forex hedge swings and early-stage impairments reveals a rapidly scaling green manufacturing platform rather than a volatile holding company. This operating visibility is central to justifying the group’s ₹2.5 lakh crore capex pipeline, positioning Adani Enterprises less as a balance-sheet risk and more as a long-duration energy transition vehicle.

Tata Steel — Separating Cyclical Pain from Structural Strength

At Tata Steel’s Q3 FY26 briefing, headline consolidated EBITDA of ₹8,309 crore for the quarter and ₹24,894 crore for the nine-month period appeared muted against historical averages. However, these reported numbers were heavily distorted by restructuring-related charges, particularly from the UK business.

Adjusted EBITDA effectively removes ₹2,000+ crore of Port Talbot restructuring impairments, alongside UK pension remeasurement impacts, offering a clearer view of core operations. Through this lens, India operations continue to demonstrate resilience, with domestic deliveries rising even as global steel demand remains weak. EBITDA margins, when adjusted, hold steady in the 14–15% range, supporting confidence in the company’s ongoing ₹10,000 crore capex program. This clarity was critical in enabling ₹5,000 crore of debt refinancing, as lenders focused on normalized cash generation rather than transitory European losses.

Zomato — Engineering Profitability Optics for a Platform Business

Few companies showcase the power—and controversy of adjusted EBITDA more starkly than Zomato. Historically loss-making on a reported basis, Zomato’s investor communications lean heavily on adjusted metrics to signal operating leverage.

In FY24, while statutory accounts still reflected losses, adjusted EBITDA turned positive at ~₹250 crore, primarily by excluding ₹1,200 crore of ESOP expenses, elevated marketing spends, and one-time listing costs. The trend accelerated in Q3 FY25, with adjusted EBITDA of ₹426 crore, even as reported profitability fluctuated due to aggressive investment in quick commerce.

By adding back Blinkit ramp-up costs and other expansion-related expenses, management highlighted scale economics 18 million monthly orders and 70% YoY revenue growth at Blinkit. This adjusted narrative played a key role in supporting $1 billion of funding at ~20x sales, despite skepticism from critics who argue that repeated exclusions risk overstating profitability. Supporters counter that adjusted EBITDA captures the platform’s trajectory toward a potential ₹10,000 crore EBITDA profile by FY26, once growth spending normalizes.

Dabur — Normalizing Short-Term Pain in a Staples Business

For a mature FMCG player like Dabur, adjusted EBITDA serves a more conservative purpose: smoothing temporary disruptions rather than redefining profitability. In Q4 FY24, reported EBITDA declined 8.6% YoY to ₹426.8 crore, with margins compressing to 15.1% from 16.6%, reflecting elevated advertising spends and raw material volatility.

Adjusted numbers likely exclude roughly ₹50 crore of restructuring and category expansion costs, restoring margins closer to the company’s normalized ~16% band. This adjusted view better reflects underlying consumer traction, particularly a 5% recovery in rural volumes post-monsoon, alongside 7% revenue growth. Equity markets responded accordingly, with the stock rallying ~12%, signaling that investors were willing to look past near-term margin noise in favor of steady core demand.

Reliance Retail — Scale, Stripped of Accounting Noise

Within Reliance Industries, adjusted EBITDA is essential to understanding the sheer operating scale of its consumer and digital businesses. For FY25, group-level adjusted EBITDA stood at approximately ₹1.8 lakh crore, after excluding large non-cash or long-gestation items such as ₹20,000 crore of Jio spectrum amortization and select impairments at RJio.

At the retail subsidiary level, adjustments add back store closure costs, one-time integration expenses, and forex volatility on imports. This reveals a far stronger operating picture: 30% YoY EBITDA growth to ~₹25,000 crore, driven by 18,000 stores and ~15% same-store sales growth. These normalized metrics underpin investor confidence in a $100 billion-plus valuation, positioning Reliance Retail as a cash-generative consumer platform rather than a margin-dilutive expansion story.

Big Picture Takeaway

Adjusted EBITDA has evolved from a disclosure footnote into a strategic storytelling tool. Used responsibly, it helps investors distinguish between structural earnings power and temporary distortion—as seen in Tata Steel and Dabur. Used aggressively, as in platform and incubation models like Zomato and Adani Enterprises, it can materially reshape valuation debates. The key for investors is not to dismiss adjusted numbers outright, but to interrogate what is being excluded, how often, and whether those exclusions are truly non-recurring. In today’s market, adjusted EBITDA doesn’t just explain performance it often defines perception.

Pitfalls and Prudent Use

Subjectivity lurks companies cherry-pick, masking cash drains. Zomato's ESOP adds-back drew SEBI scrutiny; always cross-check with FCF (Reliance's ₹75,000 crore FY25).

India Inc's aggregate EBITDA margin rose to 14.84% Q3 FY25, up from 14.4%, post-adjustments signaling efficiency. For conglomerates like Adani (26% growth), it spotlights incubators; for tech like Zomato, profitability inflection.​

In boardrooms from Gurgaon to Chennai, adjusted EBITDA isn't polish it's a lens on sustainable engines driving India's $5 trillion dream. Pair it with footnotes, and it guides smarter bets.