No immediate impact from Hindenburg on Adani firms' credit profiles: Fitch

Rating agency will be monitoring group firms closely for major changes in their access to finance, the cost of financing, regulatory/legal developments and ESG-related matters

Global credit rating outfit Fitch Ratings says there is no immediate impact on the ratings it has assigned to Adani entities and their securities following a “short-seller report” alleging malpractices at the group. No material changes are expected to its forecast cash flow.

There are also no major near-term offshore bond maturities. The earliest maturity is in June 2024 for Adani Ports and Special Economic Zone Ltd. This will be followed by the maturity of instruments in December 2024 for Adani Green Energy Limited Restricted Group 1. Then there are maturities in 2026 and beyond for all other entities, reducing refinancing risks and near-term liquidity risks.

Fitch said in a statement that ongoing monitoring will be looking closely at major changes to the rated entities’ access to financing or cost of financing on a long-term basis, unfavourable regulatory/legal developments or ESG-related matters that could affect credit profiles.

Hindenburg Research published a report on January 24, alleging various purported malpractices leading to a downfall in the share and bond prices of various group entities, despite the group publishing its response on January 30.

Fitch currently has ratings on eight entities/restricted groups within the Adani fold, including Adani Transmission, Adani Electricity Mumbai Ltd, APSEZ; Adani International Container Terminal, Adani Transmission Restricted Group 1; Adani Green Energy Restricted Group 2 and Mumbai International Airport Limited (MIAL).

Meanwhile, domestic company CARE Ratings said the observed the event (Hindenburg Report) triggered a sharp downward spiral to the combined market capitalisation of listed Adani companies.

The follow-on public offer (FPO) of Rs 20,000 crore floated by Adani Enterprises Ltd, though fully subscribed, was subsequently withdrawn following a persistent fall in the stock price on February 1. CARE Ratings in its assessment had not factored in this equity infusion.

The substantial capex being undertaken by Adani group, especially in diverse areas, exposes Adani group to inherent project execution risk, CARE Ratings said.

Nevertheless, the company management has conveyed that it is flexible enough to moderate the pace of undertaking capex, given substantial portion of such capex is discretionary in nature. Going forward, a significant increase in the external debt/PBILDT due to large debt funded capex shall be critical rating monitorable for Adani group of companies, it added.