CRISIL Ratings: Adani Group Maintains Adequate Liquidity Amid Legal Challenges

The Adani Group has sufficient liquidity and operational cash flows to meet its debt obligations and planned capital expenditures in the medium term, according to a recent update from CRISIL Ratings. The agency stated, “All our outstanding ratings are under continuous surveillance.”

On November 20, the US Department of Justice and SEC filed charges against key officials of AGEL

This update comes as the Adani Group faces legal proceedings in the United States. On November 20, 2024, the US Department of Justice and the Securities and Exchange Commission (SEC) filed charges against key officials of Adani Green Energy Ltd (AGEL), including Gautam Adani, Sagar Adani, and Vneet Jaain. The charges involve allegations of securities fraud, wire fraud, and misleading bond offering documents.

In response to these allegations, the Adani Group refuted the claims, stating, “Gautam Adani, Sagar Adani, and Vneet Jaain have not been charged with any violation of the FCPA in the counts set forth in the indictment of the US DOJ or civil complaint of the US SEC.”

Despite these ongoing challenges, CRISIL Ratings noted that, based on feedback from the Adani Group’s management and lenders, there have been no negative actions from investors or lenders to date, such as accelerated debt repayments or changes in loan terms. The group also retains the flexibility to adjust its discretionary capital expenditures in response to financial market developments.

The Adani Group reported a robust financial performance for fiscal year 2024, with earnings before interest, taxes, depreciation, and amortization (EBITDA) of ₹82,917 crore. The group’s net debt-to-EBITDA ratio stood at 2.19 times, indicating healthy debt management. As of September 2024, the group maintained a cash balance of over ₹53,000 crore, which is more than sufficient to cover its long-term debt maturities of approximately ₹27,500 crore.

CRISIL emphasized that the group’s ratings are supported by its strong business and financial risk profiles, which include steady cash flows, long-term infrastructure assets, and its critical role within India’s infrastructure sector. The group’s affiliation with the larger Adani Group also provides additional financial flexibility.

CRISIL acknowledged the Adani Group’s financial stability

While CRISIL acknowledged the Adani Group’s financial stability, it also highlighted potential risks. Any adverse regulatory or judicial actions, or restrictions on accessing domestic and international capital, could impact the group’s financial flexibility. Additionally, a significant rise in financing costs or challenges in refinancing upcoming debt repayments will be closely monitored.

Recent developments, including a decline in the market value of Adani Group’s listed companies and the cancellation of a USD 600 million bond offering by AGEL, have raised concerns. CRISIL is closely observing how these issues may affect the group’s operations and financial position in the coming months.