Adani Group Leverage High: Fitch Unit Corrects Adani Transmission, Power EBITDA and Debt Estimates

CreditSights, the arm of the Fitch Group, on Thursday corrected EBITDA and gross debt estimates for Adani Transmission, Power, respectively, after discovering calculation errors made by them. Its previous report pointed out that the Gautam Adani-led group had pursued an aggressive expansion plan that had put pressure on its credit metrics and cash flow. Adani Group, which is increasingly venturing into new and/or unrelated ventures, which are capital intensive, has also raised concerns that execution oversight is too scattered, the company said. of research. The clarification from CreditSights comes a day after the conglomerate refuted a claim made earlier by the branch of the Fitch Group. On Wednesday, Gautam Adani’s group cited an improvement in the net debt-to-operating profit ratio and a more than halving of lending by public sector banks to allay fears of falling into a debt trap.

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CreditSights, in an earlier report, claimed that the aggressive expansion pursued by the Adani Group had put pressure on its credit metrics and cash flow, adding that in the worst case it could turn into a money trap. debt and possibly in default. In a response to CreditSights’ report calling the group over-indebted, Adani Group said on Wednesday that the group’s businesses had been steadily deleveraging, with the net debt-to-Ebitda ratio declining to 3.2x from 7.6x over the past few years. past nine years. “The companies operate on a simple yet robust and repeatable business model focused on development and origination, operations and management and the capital management plan,” said the Adani Group memo, PTI reports.

Following a call with the management of the Adani conglomerate, CreditSights on Thursday cited high leverage on one unit and on another the risk of future acquisitions hurting its credit profile. For Adani Transmission, CreditSights corrected the EBITDA estimate from Rs 4,200 crore to Rs 5,200. As for Adani Power, the research firm corrected its gross debt estimate from Rs 58,200 crore to Rs 48,900 crore. “These corrections did not change our investment recommendations,” CreditSights said in its report.

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The Adani Group consists of 7 listed companies – Adani Enterprises, Adani Green Energy, Adani Ports & SEZ, Adani Transmission, Adani Total Gas, Adani Power, Adani Wilmar. It can also be noted that the National Stock Exchange of India has announced that Adani Enterprises will be included in the Nifty 50 index in place of Shree Cement from September 30, 2022. After Adani Ports, this would be the second stock from the billionaire’s stable. Gautam Adani to be included in the index. Adani Enterprises’ inclusion in the Nifty 50 could result in a net inflow of around $213 million for the stock counter, while Shree Cement will see an outflow of $87 million, according to Edelweiss Securities.