Investors' confidence in Adani Group did not waver even after US SEC action, CRISIL released report

New Delhi : Rating agency CRISIL has recently released a report regarding Adani Group. The rating states that the group has adequate liquidity and operational cash flow to meet debt obligations and committed capital expenditure.

The rating agency said that no negative action has been taken so far by lenders and investors after the US SEC leveled allegations against the group's founding chairman Gautam Adani. Crisil said in its bulletin that Adani Group has scope to reduce discretionary capital expenditure i.e. Capex based on developments in the financial markets and future capital availability. It has better earnings before tax (EBITDA) and cash balance which reduces its dependence on external loans to maintain operations.

false and misleading statements

The US Ministry of Justice and the US Securities and Exchange Commission (SEC) have filed charges in the US District Court for the Eastern District of New York against Gautam Adani, Sagar Adani and Vineet Jain, key executives of Adani Green Energy Limited (AGEL), respectively, on November 20, 2024. And filed a civil complaint. The charges relate to securities fraud, wire fraud and violations of SEC guidelines by making false and misleading statements regarding anti-bribery and anti-corruption policies in AGEL's bond offering documents.

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Bond offering canceled

CRISIL Ratings took note of these developments and their potential impact on the group's financial strength, the rating agency said. Factors noted include decline in market capitalization of the group's listed companies, volatility in bond yields and cancellation of AGEN's USD 600 million bond offering.

Ebitda ratio 2.19 times

The agency also rates the Adani Group's infrastructure and key holding units. CRISIL has said that these 'ratings' mainly depend on the strength of their business and financial risks. They take into account, inter alia, the sustainability of cash flows, the infrastructure nature of assets with long grace periods and the extent of cash flows. Adani Group reported healthy pre-tax earnings or Ebitda of Rs 82,917 crore for FY 2023-24, with a net debt-to-Ebitda ratio of 2.19 times, the agency said.

Adequate cash and operating cash flow

Based on feedback from management and select lenders, the agency said CRISIL Ratings is aware that despite these developments, no negative action has been taken so far by lenders or investors. The statement said that apart from this, we understand that Adani Group has the scope to reduce the discretionary capital expenditure i.e. Capex based on the growth in the financial markets and future capital availability. Crisil said that this matter is sub-judice. And Adani Group has sufficient cash and operating cash flows to meet debt obligations and committed capital expenditure plans in the coming period.

(with agency input)