Adani Group stocks slide up to 7% as Fitch places select bonds on ratings watch

Adani Group stocks fell up to 7 per cent in morning trade on BSE on Tuesday, November 26, a day after ratings agency Fitch put some group bonds on watch for a possible downgrade after US bribery charges.

Adani Green Energy's share price saw the steepest decline, falling 7 per cent, followed by a 5 per cent drop in Adani Energy Solutions.

Shares of the flagship firm Adani Enterprises fell nearly 4 per cent, while Adani Total Gas, Adani Power, and Adani Wilmar each declined 3 per cent.

Adani Ports and Ambuja Cements stocks slipped around 2 per cent each, while ACC and NDTV shares dropped by 1 per cent each.

Fitch has put some Adani Group bonds on watch for a possible downgrade after US authorities indicted some of its key executives on bribery charges.

"Rating watch negative (RWN) on Adani Ports and Special Economic Zone, North Queensland Export Terminal Pty Ltd and Mumbai International Airport Limited reflect increased corporate governance risk and potential contagion risk that could impact funding access and liquidity of the rated entities if corporate governance risk materialises following the US indictment," Fitch Ratings said.

Further, the rating agency said the affirmation of ratings of AGEL RG1 (Adani Green Energy Limited Restricted Group 1), AGEL RG 2, AESL RG and Adani International Container Terminal Private Limited reflects the ring-fencing structure of these restricted groups, their relatively stable operating cash flows and their almost fully amortising debt, which will minimise any impact from reduced funding access that could arise from potential contagion effects. 

"The negative outlook reflects the risk of higher funding costs and the materialisation of weakness in corporate governance and internal controls," the rating agency said.

In a rough patch

Adani Group stocks suffered massive losses on Thursday, November 21, after the US indicted the group's Chairman, Gautam Adani and some other top executives over their role in an alleged multibillion-dollar bribery and fraud scheme.

As Mint reported earlier, the US securities regulator claimed that Adani Green raised more than $175 million from US investors, and Azure Power’s stock was traded on the NYSE. The scheme allegedly enabled the two renewable energy companies to capitalise on a multi-billion-dollar solar energy project opportunity.

Shares of Adani Enterprises crashed 23 percent on Thursday. However, they saw mid-gains of 2 per cent and 1 per cent in the following two sessions.

Meanwhile, GQG Partners, one of the biggest foreign institutional investors in Adani Group, reiterated its faith in the group stock. It decided not to sell its stake in the conglomerate and said its exposure to the Adani Group stocks, even during stock market volatility, was manageable.

Adani Group business updates

On Monday, the Adani Group said it has enough cash to service debt at all group firms in the next 12 months.

The Adani Group said in its press release that its combined cash flows in the past 12 months were more than the annual debt repayments projected for each of the next 10 financial years, which highlights that its earnings can manage its debt repayment obligations.

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