CreditSights corrects debt numbers of Adani firms | The Financial Express

CreditSights corrects debt numbers of Adani firms

Drops the term ‘deeply’ over-leveraged, replaces it with ‘elevated’

CreditSights corrects debt numbers of Adani firms
In a report last month, CreditSights had described the group, which has interests across areas such as ports, power generation & transmission, airports, cement and green energy, as being “deeply over-leveraged".

CreditSights, a Fitch Group unit, has revisited its numbers for Adani Group firms and admitted to some calculation errors relating to the debt of two group companies. The unit revised profit and debt figures for Adani Transmission and Adani Power, respectively. The move follows an interaction with the Adani Group management.

In a report last month, CreditSights had described the group, which has interests across areas such as ports, power generation & transmission, airports, cement and green energy, as being “deeply over-leveraged”.

Following the recent interaction with the management, CreditSights dropped the term ‘deeply’ to say the leverage at one of the companies was ‘elevated’, while in the case of another company, it noted that the risk of future acquisitions may hurt its credit profile. “Overall, we think the leverage for Adani Enterprises is likely to remain elevated in the next few years,” it further said.

Also Read: Adani group says not overleaveraged, loans from public sector banks halved

For Adani Transmission, CreditSights corrected the earnings before interest, tax and amortisation (Ebitda) estimate to Rs 5,200 crore or $652.45 million from Rs 4,200 crore earlier. For Adani Power, it revised the gross debt estimate to Rs 48,900 crore from Rs 58,200 crore.

Analysts at CreditSights, including Pramod Shenoi, however, stated that the corrections had not altered their investment recommendations.

The debt research firm said in a report on Wednesday that it had spoken with Adani Group’s finance and other executives and reconciled some figures for Adani Transmission and Adani Power.

In a report released earlier this month, analysts at the firm pointed out that even while debt levels may have increased at the Adani Group, the cash flows have also grown steadily, with more assets coming on stream and becoming operational. As such, the net debt/Ebitda at group level has come off to around 5x in FY22, compared with a little less than 7.5x in FY16. The interest cover for the group has also increased to more than 2x now versus 0.9x in FY16.

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