CreditSights acknowledges calculation errors with regard to debt held by two Adani Group firms

9 Sep 2022 , 08:14 AM

CreditSights, a global bond analytics company that had previously raised concerns about Adani Group’s “leveraged” capital structure, acknowledged calculation errors in two significant group entities on Thursday and released a revised note to take into account the conglomerate’s ongoing efforts to reduce its debt-to-operating profit ratios and systemic capital management strategies.

In a report released on Thursday, CreditSights stated, “As a follow-up to our analysis describing our credit concerns with Adani Group firms, we are offering this piece to reconcile our calculations with Adani Group’s presentation.”

“In two of the Adani Group firms, Adani Transmission and Adani Power, we found we had made calculating errors.”

Qualitative profile descriptions like “seriously overleveraged” have been left out of the new Credit Sights remark.

The shares of four publicly traded companies under the Adani Group have increased in value by more than ten times over the previous two years, propelling promoter Gautam Adani to third place on the most recent Bloomberg billionaires list.

According to a story from ET on Monday, the Adani Group reportedly contacted CreditSights to ease concerns about rising debt by stressing its systemic capital management plan, improved net debt to operating profit ratio, and a diversified borrowing book.

The Adani management singled out specific characteristics that, in its opinion, investors should examine when evaluating the group’s credit profile, including run-rate EBITDA, sponsor affiliate debt, and cash waterfall structures for infrastructure borrowings.

The management thinks that utilizing run-rate EBITDA to calculate the group’s leverage measures gives a more accurate picture of the company’s ability to service its debt.

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