BackFitch Group's unit softens tone on Adani Group debt, corrects data
Adani Group says that the leverage ratios of its companies are healthy
PremiumFitch Group's unit CreditSights said it had discovered calculation errors in its recent debt report on two power and transmission companies controlled by India's richest person, Gautam Adani, following a conversation with the management. Its report last month called the conglomerate ‘deeply overleveraged’ and flagged other risks.
In a note published following a call with the conglomerate’s management, CreditSights cited elevated leverage at one unit and for another the risk of future acquisitions hurting its credit profile. But there was no mention of the word “deeply," and the Fitch Group unit also corrected a profit and a debt figure for Adani Transmission Ltd. and Adani Power Ltd. respectively.
For Adani Transmission, CreditSights corrected its earnings before interest, tax and amortisation (EBITDA), or core profit, estimate to 52 billion rupees ($652.45 million) from 42 billion rupees earlier. For Adani Power, it corrected its gross debt estimate to 489 billion rupees from 582 billion rupees.
“These corrections did not change our investment recommendations," the analysts including Pramod Shenoi wrote. The debt research firm said in a report on Wednesday, September 7 that it had spoken with Adani Group's finance and other executives and reconciled some figures for Adani Transmission and Adani Power.
Under Adani, now world’s third-richest person, the group has rapidly diversified from its coal-based businesses to a myriad of non-related sectors including airports, data centers, digital services and media. Much of this growth has been fueled by debt.
The Adani Group says that the leverage ratios of its companies are healthy. Earlier this week, Gautam Adani-led conglomerate said that its companies have reduced their debt burden. “The companies have consistently de-levered," with the net debt to Ebitda ratio declining to 3.2 times from 7.6 times in the last nine years, the conglomerate said.
Adani has spent the past few years expanding his coal-to-ports conglomerate, venturing into everything from data centers to cement, media and alumina. The group now owns India’s largest private-sector port and airport operator, city-gas distributor and coal miner.
The Adani Group has seven publicly traded companies - flagship Adani Enterprises, Adani Wilmar, Adani Ports, Adani Green Energy, Adani Transmission, Adani Total Gas and Adani Power.
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