S&P downgrades outlook of someAdanigroupcompanies

Moody’s, Fitch have however maintained their credit risk assessments

NEW DELHI/MUMBAI: The outlooks on some Adani group companies were downgraded to negative by S&P Global Ratings on Friday evening, even as two other rating companies maintained their credit risk assessments during the day, easing the sell-off in group companies after a seven-day rout that saw the group’s market value nearly halve.

While S&P Global Ratings revised the rating outlook of Adani Electricity and Adani Ports to negative from stable, Moody’s said that the adverse developments are likely to reduce the group’s ability to raise capital to fund committed capex or refinance maturing debt over the next 1-2 years, and Fitch Ratings said there is no immediate impact on the ratings of the rated Adani entities and their securities following the short-seller report alleging malpractices and expects no material changes to its forecast cash flow.

S&P said in a statement that there is a risk that investor concerns about the group’s governance and disclosures are larger than what it has currently factored into ratings or that new investigations and negative market sentiment may lead to increased cost of capital and reduce funding access for these two companies. It affirmed the issuer and issue ratings on the entities as their business fundamentals remain intact, shortterm liquidity is adequate, and debt maturities in the next 12 months are manageable.

“The negative outlook reflects the risk of a deterioration in the credit profile of Adani Ports and Adani Electricity

Mumbai due to governance risks and funding challenges for the larger Adani Group,” S&P said.

Meanwhile, the easing of selling pressure on Adani group stocks helped the broader markets recover on Friday and end with more than 1% gains.

After plunging a staggering 35% in morning trading, Adani

Enterprises ended in the green after rating agencies showed confidence in Adani’s capability of repaying debt, said Deepak Jasani, head of retail research at HDFC Securities. Analysts also linked the rebound in Adani stocks to the French energy major Total’s positive comments on the group.

The investor sentiments remained impacted in the morning by news flow regarding Adani Enterprises’ shares being removed from Dow Jones Sustainability indices. The Adani Enterprises shares slipped to lows of ₹1,017.45 before rebounding to end the day at ₹1,531.

Adani Ports, the other Adani group stock that is part of the Nifty index, rose 5.61%. Besides, two more group cement stocks, ACC Ltd and Ambuja Cements, rose 4-5.56%, supporting the markets.

However, the selling pressure on other Adani group firms continued, with trading in most of them halted as they hit the circuit breakers. Overall, the group’s total market cap eroded by an additional ₹34,000 crore, taking the total market cap loss to around ₹9.10 trillion since the Hindenburg report raised allegations against the Adani group.

REUTERS The group’s total market cap eroded by an additional ₹34,000 crore, taking the total market cap loss to around ₹9.10 trillion since the Hindenburg report raised allegations against the group.