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Business News/ Companies / Leaving Hindenburg behind, Moody's upgrades four Adani firms
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Leaving Hindenburg behind, Moody's upgrades four Adani firms

Moody's upgraded the outlook of two green energy firms and two electricity generation and distribution firms following improved financials, timely debt repayments and a capital infusion.

While improving the Adani group firms' rating Moody's justified that following the Hindenburg event, the group has completed a number of debt transactions, including refinancing as well as obtaining new loan facilities, demonstrating its continued access to debt capital at a reasonable cost.Premium
While improving the Adani group firms' rating Moody's justified that following the Hindenburg event, the group has completed a number of debt transactions, including refinancing as well as obtaining new loan facilities, demonstrating its continued access to debt capital at a reasonable cost.

US-headquartered ratings firm Moody's upgraded the outlook of two green energy firms and two electricity generation and distribution firms of the Adani Group following improved financials, timely debt repayments and a capital infusion by the group over the past year.

On Tuesday, Moody's, in a report, enhanced the outlook of four Adani firms from 'negative' to 'stable', while keeping outlook on eight other Adani Group companies unchanged as 'stable'.

Rating actions often influence the stock prices of the firms involved.

Adani firms lost as much as $150 billion in market capitalization and came under rating pressure after a damning report by the US-based shortseller Hindenburg Research on 24 January last year alleging the Gautam Adani-led group of governance lapses and "pulling the largest con in corporate history".

Consequently, in February 2023, Moody's had revised the outlook on four rated Adani Group companies to negative reflecting concerns over their access to capital and a potential increase in capital costs.

On Tuesday, Moody's upgraded the same four Adani firms to stable — Adani Green Energy Ltd (AGEL), Adani Green Energy Restricted Group-1 (comprising Adani Green Energy (UP) Ltd, Parampujya Solar Energy Pvt Ltd and Prayatna Developers Pvt Ltd), Adani Transmission Step-One Ltd. and Adani Electricity Mumbai Ltd.

On 29 January, Adani Green Energy said it has completed the funding for $750 million worth of notes due on 9 September 2024 (Holdco Notes) with the receipt of the funds under the preferential allotment of 9,350 crore ($1.125 billion) to the promoters of the company.

Moody's maintained stable outlook for Adani Green Energy Restricted Group (AGEL RG-2), comprising Wardha Solar (Maharashtra) Pvt. Ltd, Kodangal Solar Parks Pvt Ltd and Adani Renewable Energy (Rj) Ltd.

The outlook for Adani Energy Solutions Ltd Restricted Group 1 comprising Barmer Power Transmission Service Ltd, Raipur-Rajnandgaon-Warora Transmission Ltd, Sipat Transmission Ltd, Thar Power Transmission Service Ltd, Hadoti Power Transmission Service Ltd and Chhattisgarh-WR Transmission Ltd was kept at stable without any change by Moody's.

Also, the outlook on Adani Ports and Special Economic Zone Ltd (APSEZ) and Adani International Container Terminal Pvt Ltd was affirmed to be stable by the agency.

While improving the Adani group firms' outlook, Moody's justified that following the Hindenburg event, the group has completed a number of debt transactions, including refinancing as well as obtaining new loan facilities, demonstrating its continued access to debt capital at a reasonable cost.

"At the same time, several high profile equity transactions by large institutional and strategic investors, such as GQG and Qatar Investment Authority, also demonstrated the Group's continued equity market access," said Moody's.

Following certain PILs filed in the Supreme Court after the Hindenburg report, an investigation by the Securities and Exchange Board of India (SEBI) is still ongoing.

However, in a recent hearing the Supreme Court observed that the Hindenburg report cannot be treated as "true state of affairs" and there is no apparent regulatory failure attributable to Sebi.

This, according to Moody's has curbed the potential tail risk in a downside scenario for the Adani group firms.

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ABOUT THE AUTHOR
Anirudh Laskar
Anirudh reports on significant corporate matters including large mergers and acquisitions, India's emerging e-commerce sector and regulatory issues in the corporate and financial services industry. Over the past 17 years, he has covered many beats including banking, NBFCs, aviation, automobile, insurance, markets, SEBI, IRDAI, mutual funds, investment banking, private equity, deals, and conglomerates.
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Published: 13 Feb 2024, 09:04 PM IST
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