Shares of Adani Transmission, the electric power distribution arm of Adani Group, extended fall on Friday and hit a 5% lower circuit limit even after Fitch Ratings affirmed the 'BBB-' ratings on the $400-million senior secured notes issued by the restricted group of the company. The foreign brokerage house has assigned a stable outlook for the restricted group of Adani Transmission (ATL), saying their credit assessment is not affected by the alleged malpractices at Adani group highlighted in the Hindenburg report due to the ringfenced nature of these assets. The restricted group consists of six issuing special purpose vehicles (SPVs), and one non-issuing SPV. An SPV is a subsidiary created by a parent company to isolate its financial risks.

The restricted group includes six co-issuers - Barmer Power Transmission Service, Chhattisgarh-WR Transmission, Hadoti Power Transmission Service, Raipur-Rajnandgaon-Warora Transmission, Sipat Transmission, and Thar Power Transmission Service - and one non-issuing SPV, Adani Transmission (Rajasthan).

“The credit assessment of the restricted group reflects the project companies' availability-based revenue under a supportive regulatory framework, with low technical complexity, reflected in high availability levels and operating performance that we expect to remain stable,” Fitch said in a note released on Thursday.

Fitch projected an average debt-service coverage ratio (DSCR) of 1.48x, with a profile DSCR of 1.30x between the financial years ending March 2027 (FY27) and FY33. The DSCR is a measurement of a firm's available cash flow to pay current debt obligations. The restricted group's financial profile is stronger than that commensurate with a 'BBB-' rating for this portfolio of assets, reflecting considerable rating headroom at the current level, the agency said.

Fitch said that the restricted group’s credit assessment is not directly affected and those of the offshore bondholders will benefit from a robust cash flow waterfall mechanism and covenants that restrict cash upstreaming to shareholders and limit indebtedness. Moreover, the restricted group has a 30-year largely amortising bond.

“There are no material short to medium-term debt maturities reducing near-term liquidity and refinancing risks. The shareholder loan at Adani Transmission’s restricted group level is also minimal,” it added.

Meanwhile, shares of Adani Transmission were locked in a lower circuit of 5% at its 52-week low of ₹711.90 on the BSE. The stock has fallen 74% in the last twenty-one sessions, from ₹2,762.15 on January 24 to ₹711.90 today. The market capitalisation stood at ₹79,412 crore.

Overall, Adani Group stocks remained under selling pressure since January 24, the day when the U.S.-based investment firm Hindenburg Research released a report and made a series of allegations against Gautam Adani-controlled firms. Since January 24, nine of the listed Adani group entities have lost a cumulative market capitalisation of nearly ₹12 lakh crore, with many group companies hitting their lower circuit limits.

On Friday, all Adani group stocks were trading in red, barring Adani Ports and Ambuja Cements, while Adani Power, Adani Total Gas, Adani Green Energy, and Adani Transmission were locked in 5% lower limits on the BSE. Adani Enterprises, the flagship company of the group, was down 6%, while ACC and Adani Wilmar shed up to 2%. Adani Ports and Ambuja Cements were trading marginally higher and rose up to 1%. 

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