Backing the embattled Adani Group, CRISIL Ratings said Friday that the conglomerate has adequate liquidity and operational cash flows to meet its debt obligations and committed capital expenditure despite the recent U.S. indictment of its founder.
"There has been no negative action so far by lenders or investors," CRISIL said in a bulletin, adding that the group’s flexibility to reduce discretionary capital expenditure (capex) provides further financial resilience.
On Nov. 20, the U.S. Department of Justice and the Securities and Exchange Commission (SEC) filed an indictment and civil complaint, respectively, against Gautam Adani, his nephew Sagar Adani, and Vneet Jaain in the U.S. District Court for the Eastern District of New York.
The charges include securities fraud, wire fraud, and SEC guideline violations related to anti-bribery and anti-corruption policies in bond offering documents for Adani Green Energy Ltd. (AGEL).
CRISIL noted that the group’s financial flexibility is under scrutiny due to the indictment, the decline in market capitalisation of its listed companies, bond yield fluctuations, and the cancellation of AGEL’s $600 million bond offering. However, the rating agency emphasised the group's strong financial position.
"The Adani Group reported a healthy Ebitda (earnings before interest, taxes, depreciation, and amortisation) of Rs 82,917 crore for fiscal 2024, with a net debt-to-Ebitda ratio of 2.19 times," CRISIL said. "Cash balance stood at over Rs 53,000 crore across eight listed operating entities as of September 2024, against long-term debt maturities of Rs 27,500 crore."
CRISIL said its ratings for Adani’s infrastructure and holding entities are driven by their business and financial risk profiles, steady cash flows, and long concession periods. "The infrastructure nature of assets with long concession periods and the extent of cash flow cushions" contribute to the group's stability, it said.
"Based on management and select lender feedback, CRISIL Ratings understands that these developments have not led to any negative actions so far by lenders or investors, such as acceleration of debt repayment or spread resets," the agency stated.
CRISIL also highlighted the group's ability to adjust capex based on market conditions. "We understand the Adani Group has the flexibility to reduce certain discretionary capital expenditure depending on developments in financial markets and future capital availability," it said.
Despite its strong liquidity position, CRISIL warned of potential risks. "Any adverse regulatory, judicial, or government action may exacerbate the situation," it said, adding that access to capital markets and the ability to refinance upcoming repayments will be key factors to monitor.
The rating agency reiterated that the group's outstanding ratings remain under continuous surveillance and said, "Adani Group has sufficient liquidity and operational cash flows to meet debt obligations and committed capex plans over the medium term."
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