India’s Adani Group ‘deeply overleveraged’, CreditSights says

The logo of the Adani Group is seen on the facade of one of its buildings on the outskirts of Ahmedabad, India, April 13, 2021. REUTERS/Amit Dave

NEW DELHI, Aug 23 (Reuters) – India’s Adani Group, controlled by billionaire Gautam Adani, is “deeply overleveraged” and its many investments in capital-intensive businesses could pose long-term risks to investors, Fitch Group’s debt research unit CreditSights said on Tuesday.

The conglomerate’s debt-funded growth plans could spiral “into a massive debt trap” and culminate in distress or default of its companies and the broader Indian economy in a “worst-case scenario”, CreditSights said.

An Adani Group spokesman did not immediately respond to a request seeking comment.

The grim assessment of the conglomerate, controlled by Asia’s richest man, comes at a time its group companies are investing in new sectors such as telecom, cement and long-term infrastructure projects.

The heavy debt of the companies pose a risk at a time when interest rates are high and due to the long gestation period of some of the infrastructure projects, CreditSights said in its report.

CreditSights also flagged “high key-man risk”, saying the capability of senior management in Gautam Adani’s absence may be inadequate.

Shares in Adani Group companies including flagship Adani Enterprises (ADEL.NS), Adani Green Energy (ADNA.NS), Adani Ports (APSE.NS) and Adani Power (ADAN.NS) fell after the release of the report, which pegged the conglomerate’s total debt at 2.3 trillion rupees ($28.80 billion).

Shares of Adani Green, up about 170% over the year, led the slide falling as much 6.9%. Adani Power, which has risen more than five-fold in the last year, fell 5% to hit the lower circuit- the limit a stock price can move on a single day.

($1=79.8550 Indian rupees)

Reporting by Manoj Kumar; editing by Jason Neely

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