Adani Stock: No Immediate Impact On Credit Profiles Of Rated Entities From ‘Short-Seller’ Report, Fitch Says

Hindenburg Research alleged that Adani Group has engaged in a “brazen stock manipulation and accounting fraud scheme over the course of decades.”

“There are also no near-term significant offshore bond maturities," Fitch noted.

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Fitch Ratings, the New York-headquartered credit rating agency, on Friday said that there’s no “immediate impact” on the ratings of Fitch-rated Adani entities and their securities following a “short-seller report” alleging malpractices at the Gautam Adani-led group. The agency expects no material changes to its forecast cash flow. The report that Fitch is referring to here is the one published by investment research firm Hindenburg Research on January 24, alleging that Adani Group has engaged in a “brazen stock manipulation and accounting fraud scheme over the course of decades.”

“There are also no near-term significant offshore bond maturities – earliest in June 2024 for Adani Ports and Special Economic Zone Limited (APSEZ, BBB-/Stable); December 2024 for Adani Green Energy Limited Restricted Group 1 (AGEL RG1, BB+/Stable); and 2026 or beyond for all other entities – reducing refinancing risks and near-term liquidity risks,” Fitch noted in its recent non-rating action commentary. 

Fitch added that its ongoing monitoring will be keeping an eagle eye “at any 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.”

At present, Fitch has ratings on eight entities/restricted bodies within the Adani group — Adani Transmission Limited (ATL, BBB-/Stable); Adani Electricity Mumbai Limited (AEML, senior secured US dollar notes rated at ‘BBB-’); APSEZ; Adani International Container Terminal Private Limited (AICTPL, senior secured US dollar notes rated at ‘BBB-’/Stable); Adani Transmission Restricted Group 1 (ATL RG1, BBB-/Stable); Adani Green Energy Restricted Group 2 (AGEL RG2, senior secured US dollar notes ‘BBB-’/Stable); AGEL RG1 and Mumbai International Airport Limited (MIAL, senior secured US dollar notes ‘BB+’/Stable).

Fitch further noted that ATL RG1 restricted group includes six co-issuers - Barmer Power Transmission Service Limited, Chhattisgarh-WR Transmission Limited, Hadoti Power Transmission Service Limited, Raipur-Rajnandgaon-Warora Transmission Limited, Sipat Transmission Limited and Thar Power Transmission Service Limited - and one non-issuing SPV, Adani Transmission (Rajasthan) Ltd (ATRL).

“Fitch’s assessment of AEML reflects its regulated business across electricity generation, transmission and distribution, and supply businesses, which provide cash flow certainty. The regulations allow for pass-through of all operating and financing costs, limiting the impact on the credit profile even in the event of rising interest costs,” the agency noted. “AEML has low counterparty risk, while construction risk is also minimal as most planned investments are granular capex approved by the regulator.”