S&P Global upgrades Adani Ports, Adani Electricity credit outlook to 'stable'
Elara Securities raises target price of Reliance Industries post Q3 results; buy or sell? In early January 2024, the Supreme Court of India issued a judgement confirming that India's capital markets regulator, Securities and Exchange Board of India (SEBI), had completed its investigation of 22 of the 24 allegations against the Adani portfolio entities. SEBI will complete its investigation of the two remaining allegations, relating to Foreign Portfolio Investors (FPI), within the next three months.
“The stable outlook reflects our expectation that APSEZ will have stable operations, and that management will adjust its growth aspirations, shareholder distributions, and investments. This should help it achieve a ratio of adjusted net debt to EBITDA of about 3x-4x over the next two years.
In addition, we assume that APSEZ will not undertake significant related-party transactions outside the normal course of business," S&P Global said in its report. The brokerage firm further expressed confidence that the resolution of the majority of regulatory investigations into the Adani Group, coupled with the absence of evidence of misconduct, has mitigated potential downward risks.
However, the agency noted that the conglomerate, being a sizable family-owned entity with ambitious expansion goals and engaging in transactions with related parties, still faces certain governance risks. Also read: Cipla Q3 results: Pharma company reports consolidated net profit of ₹1,056 crore It further said that APSEZ's ratio of FFO to debt is likely to stay below 15%.
This could happen if the company maintains aggressive growth without adequate funding access and its operating performance deteriorates sharply from the expectations. Meanwhile, the agency
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