Fitch Ratings on Friday said there is no immediate impact on the credit ratings of Adani group entities and their securities following a “short-seller report” alleging malpractices at billionaire Gautam Adani-controlled firms. The global rating agency does not expect any material changes to its forecast cash flow.

“There are also no near-term significant offshore bond maturities – earliest in June 2024 for Adani Ports and Special Economic Zone Limited (APSEZ, BBB-/Stable); December 2024 for Adani Green Energy Limited Restricted Group 1 (AGEL RG1, BB+/Stable); and 2026 or beyond for all other entities – reducing refinancing risks and near-term liquidity risks,” the American credit ratings agency says in a report.

The report by Fitch came a week after Hindenburg Research revealed a short position in the Adani group companies through its U.S.-traded bonds and Indian-listed derivatives, citing the seven listed entities of the conglomerate are 85% overvalued. The investment firm alleged that multiple firms under Adani were highly leveraged relative to industry averages, and that the situation was worsening. “Key listed Adani companies have also taken on substantial debt, including pledging shares of their inflated stock for loans, putting the entire group on precarious financial footing. 5 of 7 key listed companies have reported ‘current ratios’ below 1, indicating near-term liquidity pressure,” it said in the report.

Fitch states that ongoing monitoring will be looking closely at any major changes to the rated entities’ access to financing or cost of financing on a long-term basis, unfavourable regulatory/legal developments or ESG-related matters that could affect credit profiles.

Fitch currently has ratings on eight entities within the Adani group -- Adani Transmission Limited (ATL, BBB-/Stable); Adani Electricity Mumbai Limited (AEML, senior secured US dollar notes rated at ‘BBB-’); APSEZ; Adani International Container Terminal Private Limited (AICTPL, senior secured US dollar notes rated at ‘BBB-’/Stable); Adani Transmission Restricted Group 1 (ATL RG1, BBB-/Stable); Adani Green Energy Restricted Group 2 (AGEL RG2, senior secured US dollar notes ‘BBB-’/Stable); AGEL RG1 and Mumbai International Airport Limited (MIAL, senior secured US dollar notes ‘BB+’/Stable).

Following the release of Hindenburg Research report, the total market cap of Adani Group has fallen from ₹19.21 lakh crore to ₹10.41 lakh crore on February 2, down by ₹8.76 lakh crore or 45.68%. On Thursday, group companies lost ₹1.32 lakh crore in market capatilisation, with the five group stocks closing in lower circuit even as the chairman Gautam Adani tried to soothe nerves of jittery investors through a detailed video message.

On Friday, most of Adani group shares hit their lower circuit after the National Stock Exchange (NSE) put three firms -- Adani Enterprises, Adani Ports, and Ambuja Cements -- under the additional surveillance measure (ASM) framework from February 3, 2023. Adani Enterprises, the flagship company of the group, will be removed from the Dow Jones Sustainability Indices, prior to open on February 7. 

Among individual stocks, Adani Enterprises was the biggest loser with a 20% loss, followed by Adani Green Energy and Adani Transmission, which were locked in 10% lower circuit limit. Similarly, Adani Power, Adani Total Gas, Adani Wilmar fell 5% each, while Adani Port & SEZ declined 6.5%. Shares of ACC and Ambuja Cements also witnessed selling pressure falling up to 3% during the trade.

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