Weeks after it revised the rating outlook of two companies of the embattled Adani group, S&P Global Ratings on Wednesday said it is watching for additional information on the conglomerate’s governance and funding for any ratings action.
Investors, it said, seek clarity on the credit impact of a string of allegations against the group in a short-seller report published in late January, and on the findings of a recently launched Supreme Court investigation.
S&P Global published an FAQ-style commentary titled, “Adani Group: The Known Unknowns”.
“Like much of the market, we are waiting for more information about the Adani Group before deciding the direction of our ratings. We believe further details on governance and funding risks over the next 12-24 months would drive the ratings,” said S&P Global Ratings credit analyst Abhishek Dangra.
Last month, S&P Global Ratings revised outlook on Adani Ports and Adani Electricity to negative from stable after the report of Hindenburg Research alleged significant governance issues, many relating to disclosures. Adani group has denied all allegations.
“Downside risks (to rating) could stem not just from restricted access to funding, but also from our broader view on the quality of the group’s governance,” S&P said on Wednesday, adding that a negative rating action was possible should any investigation uncover serious wrongdoing. This may include previously undisclosed material related-party loans, cash leakage or misreporting.
“Conversely, to revise the outlook to stable, we will need to be convinced that governance practices in the group and funding access will improve in line with an investment-grade credit profile,” it said.
On next steps and watchpoints, it said, “The key will be additional information regarding Adani Group’s governance and funding.”
Key watchpoints include a report of a Supreme Court-appointed independent panel of experts (comprising industry luminaries), which is investigating potential regulatory shortcomings in the oversight and disclosures of Adani Group.
The court has also directed capital markets regulator Securities and Exchange Board of India (Sebi) to submit its findings to the panel in two months.
More airports
Adani Airports on Wednesday said that it will bid for more airports as it chases the ambition to become one of the leading operators in the globe.
Adani Airports Holdings Ltd (AAHL) which is an arm of group flagship Adani Enterprises Ltd (AEL) is currently the country’s largest private airport operator. The conglomerate had ventured into the airports sector in 2019.
Following the Hindenburg report, the Adani group has focussed on conserving resources, cutting debt and continue investing only in existing capex programmes in core infrastructure segment.
However, the group is not pruning its planned segments in the airport business, even as it is also open to bid for more airports at the right conditions. This was indicated by AAHL CEO Arun Bansal. He was speaking to reporters on the sidelines of the CAPA India aviation summit in the national capital.
