CreditSights finds ‘calculation errors’ in its debt report on Adani Group

Fitch Group’s debt analysis unit CreditSights, which had raised purple flags over Adani Group being over leveraged, mentioned in a brand new report that it “has discovered calculation errors” in its current debt report on two Adani Group corporations, following a dialog with the administration.

However, it additionally identified that the most recent “corrections” didn’t change its funding suggestions.

“In a follow-up to our report outlining our credit concerns with Adani Group companies, we are presenting this piece to reconcile our calculations with Adani Group’s presentation. We have also spoken with Adani Group’s CFO (Mr. Jugeshinder (Robbie) Singh), Head of Corporate Finance (Mr. Anupam Misra) and Head of Ratings (Mr. Rahul Kumar) during the week of 22 August,” CreditSights mentioned in a report dated September 7.

“As part of this discussion, we discovered calculation errors we had made in two of the Adani Group companies, Adani Transmission and Adani Power. For Adani Transmission, we have corrected our EBITDA estimate from INR 42 bn to INR 52 bn (from Rs 4,200 crore to Rs 5,200 crore). For Adani Power, we have corrected our gross debt estimate from INR 582 bn to INR 489 bn (from Rs 58,200 crore to Rs 48,900 crore). These corrections did not change our investment recommendations,” the report added.

Last month, CreditSights had mentioned the Adani Group is “deeply over leveraged”, and will, “in the worst-case scenario”, spiral right into a debt lure and presumably a default.

The report famous that the group has been making aggressive investments which are predominantly funded with debt, placing stress on its credit score metrics and money stream.

Following this, the Adani Group issued a press release saying its corporations have lowered their debt burden and that the leverage ratios of the group corporations “continue to be healthy and are in line with industry benchmarks”.

In its newest report, CreditSights famous: “Management views that the group’s leverage is at manageable levels, and that its expansion plans have not been mainly debt funded”.

“Though we have taken cognisance of management’s viewpoints, we have a different opinion on the above,” the company additional mentioned.