Moody's cuts outlook on 7 Adani Group firms to 'negative'; flags governance, funding risks

Moody's said that the charges and allegations could have a broader credit impact on all rated Adani Group issuers.

Moody's Ratings has changed its credit rating outlook on seven Adani Group companies from ‘stable’ to ‘negative’, citing concerns over governance and potential disruptions following bribery and fraud charges against chairman Gautam Adani and others. While the ratings firm has affirmed the ratings for all seven entities, the negative outlook stems from heightened risks to the group’s funding access and potential operational challenges, it said.

The entities include Adani Ports and Special Economic Zone Limited and two limited restricted groups of Adani Green Energy.

The seven Adani Group entities downgraded to ‘negative’ outlook are:

• Adani Green Energy Limited Restricted Group 1 (AGEL RG-1) – Ba1 ratings affirmed; outlook changed to negative.
• Adani Green Energy Limited Restricted Group 2 (AGEL RG-2) – Ba1 ratings affirmed; outlook changed to negative.
• Adani Transmission Step-One Limited (ATSOL) – Baa3 ratings affirmed; outlook changed to negative.
• Adani Transmission Restricted Group 1 (AESL RG1) – Baa3 ratings affirmed; outlook changed to negative.
• Adani Electricity Mumbai Limited (AEML) – Baa3 ratings affirmed; outlook changed to negative.
• Adani Ports and Special Economic Zone Ltd (APSEZ) – Baa3 ratings affirmed; outlook changed to negative.
• Adani International Container Terminal Private Ltd (AICTPL) – Baa3 ratings affirmed; outlook changed to negative.

The charges and allegations “could have a broader credit impact on all rated Adani Group issuers, given Gautam Adani's prominent role as chairman of each of the rated entities or their parent companies as well as the controlling shareholder”, said Moody's.

Concerns over governance and funding

Moody's cited potential governance weaknesses across the group and warned of operational disruptions that may affect capital spending plans while legal proceedings are ongoing.

The move comes after S&P Global Ratings last week revised its outlook on three Adani entities—Adani Electricity Mumbai Ltd, Adani Ports and SEZ Ltd, and Adani Green Energy Ltd Restricted Group 2 (AGEL RG2)—to negative. S&P flagged similar concerns about governance practices and warned that the group’s cash flows could be materially impacted if allegations are proven or if funding access weakens.

The developments follow a dramatic sell-off in Adani Group stocks and bonds after US prosecutors charged Gautam Adani with orchestrating a $250 million bribery scheme to secure solar energy contracts in India. On November 21, the group’s listed firms lost Rs 2.2 lakh crore in market capitalisation, marking one of the steepest single-day declines in its history.

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