An Adani Group firm may soon have higher rating than the sovereign

Adani Group’s CFO further said that an announcement will be made shortly that one of the group firms will become the first Indian company with all its operations in the country to be rated higher than the sovereign.

However, the company has yet to be named.

The move comes amid lower debt levels and rapid growth in the business of the port-to-energy conglomerate headed by Gautam Adani, Asia’s richest man.

Most companies, including public sector giants, are rated at par or below the state rating.

Global credit rating agencies, including S&P and Fitch, have awarded India the lowest investment grade rating of ‘BBB-‘.

By June 2021, Fitch Ratings had upgraded Reliance Industries Ltd of rival industrialist Mukesh Ambani to a level above India’s state rating, citing an improving debt profile.

But according to some, RIL also has business outside of India. And Singh made it a point at the investor meeting to say that the Adani Group company will be the first Indian company with all its operations in the country to achieve that kind of rating.

Currently, Adani Transmission Ltd, one of the six publicly traded companies of the Adani Group, is on par with the state.

It enjoys a BBB- (negative outlook) rating from Fitch, a BBB- rating from S&P and a Baa3 (stable outlook) rating from Moody’s Investors Service. These are the same ratings that the three agencies also awarded India.

Adani Transmission’s S&P Rating Withdrawn

Earlier today, S&P Global Ratings withdrew its rating for Adani Transmission, ending a barely investment grade rating at the company’s request.

The withdrawal of the BBB rating follows a restructuring at the company, part of the Gautam Adani conglomerate. The revamp has not weakened protections for bondholders, S&P said.

S&P still estimates Adani Ports and Special Economic Zone Ltd at BBB- with stable outlook, a spokesman said.

The shift comes just a few weeks after a report by CreditSights, which called the group “deeply overloaded.” entrepreneur has too much debt.

In a rebuttal to CreditSights, Adani Group called its companies’ leverage ratios “healthy.”

‘Conglomerate does not have excessive leverage’

At the meeting with investors, Singh said that contrary to popular belief, the conglomerate is not overly leveraged and its expansion has been financed equally with equity.

Adani Green Energy Ltd – the renewable energy arm of the group – also has a rating equivalent to that of the state.

The group, which was once a medium-sized trading company from Ahmedabad, has seen a meteoric rise in recent years. The market capitalization of the companies of the Adani group exceeds that of Tatas, India’s largest conglomerate, and Reliance Industries.

Adani started as a goods trader in 1988 and quickly expanded into ports, airports, roads, energy, renewable energy, power transmission, gas distribution, real estate, FMCG, cement, data centers and media companies.

The staggering share price gains of Adani’s six publicly traded companies have helped him become the richest in the country and the third richest man in the world.

The report further quoted Singh as saying the group wants to increase the stock’s free float in a move that could improve trading liquidity.

The six group firms have a small free float — the number of shares that can actually be traded by the public — leading to greater stock price volatility, some analysts say.

Adani Enterprises, the new business incubator of the Adani Group, has a free float of 19.6%. In contrast, the free float of Reliance, India’s largest publicly traded company, stands at 50.4% and that of Tata Consultancy Services is 27.7%.

Adani Group’s CFO said the group was working on a plan to increase its free float, but did not share details.

Before the rating upgrade, Singh cited growth in business volume and cash gains sufficient to pay off debt.

With input from the agency

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