In support of the Adani Group, rating agency CRISIL Ratings stated on Friday that the conglomerate has adequate liquidity and operational cash flows to meet its debt obligations and committed capital expenditure. It also noted that there have been no negative actions from lenders or investors following the United States indictment of the Group’s founder and chairman.
The Adani Group, which has the flexibility to reduce certain discretionary capital expenditure (capex) depending on market developments and future capital availability, maintains a strong EBITDA and cash balance, which lessens its reliance on external debt to sustain operations, the agency said in a bulletin.
On November 20, the US Department of Justice (DoJ) and the US Securities and Exchange Commission (SEC) filed an indictment and a civil complaint, respectively, in the United States District Court for the Eastern District of New York, against Gautam Adani, Sagar Adani and Vneet Jaain, key figures in Adani Green Energy Ltd (AGEL).
The charges are related to claims of wire fraud, securities fraud and SEC rules violations that resulted in materially false and misleading representations about AGEL’s anti-corruption and anti-bribery policies in its bond offering materials.
The rating agency said, “CRISIL Ratings has taken note of these developments and their likely impact on the financial flexibility of the group, including the fall in the market capitalisation of the listed companies of the group, movement in bond yields and calling off the USD 600 million bond offering of AGEL.”
The holding companies and infrastructure of the Adani Group are rated by the agency.
“These ratings are driven largely by the strength of their business and financial risk profiles. They, inter alia, factor in the steadiness of cash flows, the infrastructure nature of assets with long concession periods and extent of cash flow cushions,” it claimed.
In some instances, it also takes into account the extra freedom that these organisations have due to their affiliation with and importance to the wider Adani Group, one of India’s top infrastructure companies.
“The Adani Group reported a healthy EBITDA (earnings before interest, taxes, depreciation and amortisation) of Rs 82,917 crore for fiscal 2024 with a net debt-to-Ebitda ratio of 2.19 times. Cash balance was over Rs 53,000 crores across 8 listed operating entities as of September 2024 against long-term debt maturities of Rs 27,500 crore; and go-to-market/construction facility of Rs 8,919 crore during October-March fiscal 2025 and Rs 2,137 crore during fiscal 2026,” Crisil said.
Depending upon the management and a few selected lenders, the agency further said, “CRISIL Ratings understands that these developments have not led to any negative actions so far by lenders/investors, such as acceleration of debt repayment or spread resets.”
“Further, we understand the Adani Group has the flexibility to reduce certain discretionary capital expenditure (capex) depending on developments in financial markets and future capital availability,” the statement added, underscoring the ongoing monitoring of all outstanding ratings.
Crisil pointed out that “Adani Group has sufficient liquidity and operational cash flows to meet debt obligation and committed capex plans over the medium-term,” indicating that the matter at hand is subjudice.
The rating agency said that any unfavourable political, judicial or regulatory action may make matters worse.
“Thus, these actions will be monitored. Further, any fall-out of developments restricting the Adani Group’s access to domestic and international capital and hampering its ability to refinance upcoming bullet repayments as well as a significant increase in its cost of financing will also be key monitorables,” it concluded.
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