Ports-to-power conglomerate Adani ‘highly overrated’: CreditSights | Whuff News

Billionaire Gautam Adani’s porttopowerconglomerate is “deeplyover leveraged,” with the group investing aggressively across existing and new businesses, mostly debt-financed, CreditSights, a unit of the Fitch Group, in a report. Aggressive expansion by the Adani Group, led by Asia’s richest man, has put pressure on its credit and cash flow metrics, CreditSights said in the report Tuesday, adding that “in a worst-case scenario” it could fall into a debt trap and possibly default.


“We see little evidence of the injection of promoter equity capital into group companies, which we feel is necessary to reducing leverage in their stretched balance sheets,” the agency said, referring to to infusion of funds from the founders of the Adani Group. A representative for the Adani Group did not immediately respond to request to comment on the report. Five of Adani Group’s seven listed firms closed lower on Tuesday.

CreditSights‘ report comes after a big few years for Adani, which has done rapid diversification, growing an empire centered on port and coal mining to including airports, data centers and cement and green energy.

The group recently pledged to plowing $70 billion into renewable projects. The move has not only boosted Adani’s position in India, but also its fortunes, with its net worth soaring past $135 billion this year. He is also increasingly moving into a field dominated by the man he replaced as Asia’s richest man, fellow countryman Mukesh Ambani of Reliance Industries.

Fault lines

The CreditSights the report focuses on various fault lines that may hinder Adani’s ambitions and a stratospheric surge in his firm’s shares. CreditSights‘ analysts, however, said they took “comfort” from the group’s strong ties with banks and government administrations.

A self-made billionaire who started his business as an agricultural trading firm in the late 1980s, Adani has also been a busy deal maker this year. Adani Group acquired Israel’s Haifa port in July for $1.2 billion and Swiss firm Holcim’s Indian cement unit for $10.5 billion in May, in addition to nearly three dozen acquisitions large and small. It is also expanding into media, healthcare and digital services.

Adani Group on Tuesday announced the acquisition of local news firm, NDTV, as it seeks a bigger foothold in the local media sector. It also marks another example of the growing overlap between the two billionaires, given Ambani’s large presence in the country’s media and entertainment sectors.

The group owns India’s largest private sector port operator, coal miner, city gas distributor and airport operator and aims to to creating the world’s largest renewable power generator.

‘Pull out all the stops’

Investors have cheered the tycoon’s capabilities to is growing its business rapidly, fueling massive stock gains in the Adani firm even during the pandemic, when most businesses are suffering.

Adani Enterprises and Adani Green Energy have surged more than 1,300 percent since the start of 2020. Adani Total Gas has risen about 1,900 percent and Adani Transmission over 900 percent, while the benchmark S&P BSE Sensex has surged nearly 42 percent during this period.

But it’s this rapid growth that makes credit watchers, including CreditSights, restless. The research firm acknowledged that the status of Adani’s founding family as majority shareholders in many of their listed group companies meant they would be out all the way. to support them.

“The whole wealth and reputation of the family is tied up

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