Hindenburg impact: Icra says monitoring Adani group companies

Domestic ratings agency Icra on Wednesday said it is monitoring the impact of the run on the Adani group stocks and other financial instruments. “We are monitoring the developments on… rated portfolio in the Adani Group of companies, especially the financial flexibility of the group with key monitorables being access to domestic and international capital markets and banking channels, pricing of debt, tightening of debt covenants, recall or acceleration of debt facilities and refinancing,” Icra Ratings said in a statement. New York-based short-selling specialist firm Hindenburg Research on January 24 published a report making several adverse observations regarding accounting practices, related-party transactions, concentrated shares ownership by a few overseas investments firms and share price manipulation by the Adani group of companies.

Subsequent to the release of the report, the share prices of the listed Adani group companies have lost more than a third of their value. The Adani group on January 29 gave a detailed response to the Hindenburg report, refuting the allegations and stating that most of the observations relate to matters that have been duly disclosed by the conglomerate in the past.

“While the Icra-rated Adani group entities do not have any immediate refinancing requirement, it is expected for some of the entities from FY25 onwards. “However, comfort is drawn from the high visibility on cashflows for these entities supported by the long tenure of the off-take contracts in case of ATL (Adani Transmission Ltd), favorable demand prospects, dominant market position and long-term customer contracts for Adani Ports & Special Economic Zone and favourable economics of conversion for Adani Total Gas and the strong liquidity position maintained by the group,” the agency said. While the large debt funded capex programme of the group remains a key challenge, it noted that some of the planned capex is discretionary in nature and can be deferred depending on the liquidity position.

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