Adani Energy, Adani Green, Adani Ports: 3 Adani stocks react to Fitch rating actions

Shares of Adani Energy Solutions Ltd, Adani Green Energy Ltd and Adani Ports and Special Economic Zone Ltd shares were down up to 2 per cent in Tuesday’s trade after the rating Fitch put a few Adani group bonds on rating watch for a possible downgrade after US authorities indicted Gautam Adani and some key executives of the conglomerate on bribery charges.

Adani Energy Solutions dropped 0.90 per cent to Rs 619.20. Adani Ports shares declined 0.63 per cent to Rs 1,159.10. Adani Green Energy slipped 3.34 per cent to Rs 603.95.

Adani Energy Solutions, Adani Electricity Mumbai and some of Adani Ports and Special Economic Zone rupee and dollar bonds are now on “watch negative”, Fitch said in a statement. Ratings on four Adani subsidiary senior unsecured dollar bonds were downgraded from stable to negative, the agency said.

Fitch said the near-term liquidity of the rated entities seem to be sufficient, as there are no significant scheduled debt maturities in the next 12-18 months and the entities have some capex flexibility.

While the US indictment mainly involves Adani Green Energy’s key leadership, the proceedings and the outcome could reflect significantly weaker corporate governance practices of the group and can lead to further negative rating actions, Fitch said.

“Two of the indicted board members belong to the founding shareholders of Adani group, which effectively own a majority of shares in all rated group entities (except AICTPL). These directors also serve on the boards of most other rated entities, raising contagion risk and renewing governance concerns across the group,” it noted.

Fitch said it would monitor the ongoing investigations for developments impacting financial flexibility of the rated entities, particularly any material deterioration in near- to medium-term funding access, including their ability to roll over existing credit lines or access new facilities, as well as potentially higher funding costs.

Fitch suggested a rating watch negative on long-term foreign-currency IDR of ‘BBB-‘ for Adani Ports. It suggested ‘BBB-‘ rating for its dollar senior unsecured bonds.

It revised its outlook ‘Negative’ from ‘Stable’ for the ‘BBB-‘ rating on Adani Green Energy Limited Restricted Group 1’s (AGEL RG1) US dollar senior secured bonds. It suggested ‘BBB-‘ rating on Adani Green Energy Limited Restricted Group 2’s (AGEL RG2) and on Adani Energy Solutions Restricted Group’s (AESL RG) dollar senior secured bonds. AGEL RG1 and AGEL RG2 are subsidiaries of Adani Green Energy.

Adani Ports’ cash balance of Rs 8,900 crore at end-September and its free cash flow should cover its current debt maturities of Rs 11,300 crore to the financial year ending March 2026 (FY26), with next major US dollar bond due in July 2027, it said. The liquidity of AICTPL, AGEL RG1, AGEL RG2 and AESL RG is supported by the nearly fully amortising nature of their debt, legal ring-fencing, cash flow waterfall mechanisms, covenants that restrict cash upstreaming and limit indebtedness, and stable cash flows, it said.