CreditSights Finds Calculation Errors In Its Debt Report On Adani Group Companies

CreditSights said that it had spoken with Adani Group's finance and other executives and reconciled some figures for Adani Transmission and Adani Power

CreditSights, a unit of Fitch Group, said that it had found calculation errors in its recent debt report on two power and transmission firms owned by world's third richest man, Gautam Adani, following a conversation with the management, news agency Reuters stated on Thursday.

According to the report, CreditSights's report late last month calling the conglomerate "deeply overleveraged" and flagging other risks had sent shares of several Adani companies down. CreditSights said that it had spoken with Adani Group's finance and other executives and reconciled some figures for Adani Transmission and Adani Power.

"Management views that the group's leverage is at manageable levels, and that its expansion plans have not been mainly debt funded," CreditSights said about the group that has announced deals worth billions of dollars this year alone.

For Adani Transmission, CreditSights corrected its earnings before interest, tax and amortisation (Ebitda), or core profit, estimate to Rs 5,200 crore ($652.45 million) from Rs 4,200 crore earlier, while for Adani Power, it corrected its gross debt estimate to Rs 48,900 crore from Rs 58,200 crore. However, CreditSights did not give the period for the estimates.

"These corrections did not change our investment recommendations," CreditSights said, adding that it, however, did not have formal recommendations on the two power and transmission companies.

The report said that the combined market value of Adani Group’s seven publicly traded companies – flagship Adani Enterprises, Adani Wilmar, Adani Ports, Adani Green Energy, Adani Transmission, Adani Total Gas, and Adani Power – has grown nearly tenfold in the past three years to about $251 billion.

Meanwhile, two days back, Adani Group in a note cited an improved net debt to operating profit ratio and more than halving of loans from public sector banks to allay concerns about it being overleveraged, the PTI reported.

According to the report, in a 15-page note in response to CreditSights report calling the group overleveraged, Adani Group said companies in the conglomerate have consistently de-levered, with the net debt to Ebitda ratio declining to 3.2 times from 7.6 times in the past nine years. "The businesses operate on a simple yet robust and repeatable business model focused on development and origination, operations and management and capital management plan," the note stated.