Backing the Adani Group, embattled in the US bribery case, CRISIL Ratings on Friday said that while the issue at hand is sub judice, the conglomerate has sufficient liquidity and operational cash flows to meet debt obligation and committed capex plans over the medium term.
CRISIL Ratings also factored in the additional flexibility available to the group entities through their association with, and criticality to, the larger Adani Group, “which is one of the leading infrastructure groups in India”. The Adani Group reported a healthy Ebitda of approximately 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 crore across 8 listed operating entities as of September 2024 against long-term debt maturities of around 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, the ratings agency stated.
Earlier last week, the US Securities and Exchange Commission indicted Adani Group Chairman Gautam Adani, Sagar Adani and Vneet Jaain, with conspiracies to commit securities and wire fraud and substantive securities fraud for their roles in a multi-billion-dollar scheme to obtain funds from US investors and global financial institutions on the basis of false and misleading statements.
In a parallel move, the Securities and Exchange Commission also charged Gautam Adani and Sagar Adani, and Cyril Cabanes, with conduct arising out of a massive bribery scheme.
Based on management and select lender feedback, CRISIL Ratings said, these developments have not led to any negative actions so far by lenders/investors, such as acceleration of debt repayment or spread resets. Further, it added, “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.”
Earlier, GQG Partners had issued a statement maintaining confidence in the group companies’ fundamentals. GQG Partners said that the indictment is of the employees and not the company. “As the facts currently stand on 21 November, we do not see these actions as having a material impact on these businesses. These businesses operate critical infrastructure regulated by the Indian government,” it had said, while maintaining that there will be no changes in its investment outlook at present.
CRISIL Ratings has rated the Adani group’s infrastructure and holding entities. These ratings, it added, 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.
The ratings agency further noted that all its outstanding ratings are under continuous surveillance, while adding that, “CRISIL believes any adverse regulatory, judicial or government action may exacerbate the situation. 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.”