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Moody's Cuts Outlook for Four Adani Group Companies, Cites Rapid Declines in Market Value

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  • Moody's cut its outlook for Adani Green Energy from stable to negative, alongside Adani Transmission Step-One, Adani Electricity Mumbai and Adani Green Energy Restricted Group.
  • For Adani Green Energy, Moody's said the downgrade to negative takes into consideration the company's large capital spending program and dependence on support from its sponsors.
  • Moody's maintained its current outlook for four other Adani group companies, including Adani Ports and Special Economic Zone and Adani International Container Terminal.

Moody's lowered its outlook for four Adani Group companies on Friday, citing a "significant and rapid decline" in the market values of the entities, the ratings agency said in a notice.

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It cut the outlook for Adani Green Energy from stable to negative, alongside Adani Transmission Step-One, Adani Electricity Mumbai and Adani Green Energy Restricted Group – an entity that includes Adani Green Energy, Parampujya Solar Energy, and Prayatna Developers.

"These rating actions follow the significant and rapid decline in the market equity values of the Adani Group companies following the recent release of a report from a short-seller," Moody's said.

Without naming Hindenburg Research, the ratings agency highlighted "the recent release of a report from a short-seller highlighting governance concerns in the Group."

The U.S. short-seller in a Jan. 24 report accused the Indian conglomerate of stock manipulation and accounting fraud, and Adani has denied those allegations.

Adani group companies have lost more than $100 billion in market capitalization as shares plunged since the Hindenburg report.

Credit concerns

For Adani Green Energy, Moody's said the downgrade to negative takes into consideration the company's large capital spending program and dependence on support from its sponsors.

Moody's described Adani Green Energy's support will potentially come in the form of subordinated debt or shareholder loans, adding that it will "likely be less certain in the current environment."

"The negative outlook also factors in the company's significant refinancing needs of around $2.7 billion in fiscal year ending March 2025 and limited headroom in its credit metrics to manage any material increase in funding costs," it said.

Four Adani entities remain stable

Meanwhile, Moody's maintained its stable outlook for four other Adani group companies, including Adani Ports and Special Economic Zone and Adani International Container Terminal. Adani Green Energy Restricted Group and Adani Transmission Restricted Group were also on the list.

The latest revision from Moody's comes after global index provider MSCI announced last week it will be cutting the weightings of Adani Enterprises, the conglomerate's flagship company, and three other Adani group companies.

MSCI's latest quarterly review, however, showed no Adani stocks have been removed from its global index.

Adani Enterprises is scheduled to report its third-quarter earnings on Tuesday.

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