Moody’s Ratings has affirmed the ratings of seven Adani Group companies from ‘stable’ to ‘negative’. Earlier, Fitch Ratings also put the firms on a negative rating watch. File
| Photo Credit: Reuters

Moody’s Ratings has on Tuesday (November 26, 2024) affirmed the ratings of seven Adani Group companies from ‘stable’ to ‘negative’. In a statement the global rating firm said “At the same time, we have changed the outlook on all seven issuers to negative from stable.”

Earlier on Tuesday (November 26, 2024) Fitch Ratings also put Adani group firms on a negative rating watch.

The seven affected issuers are:

1. Adani Green Energy Limited Restricted Group (AGEL RG-1), which comprises Adani Green Energy (UP) Limited; Parampujya Solar Energy Private Limited; Prayatna Developers Private Limited, 2. Adani Green Energy Limited Restricted Group (AGEL RG-2), which comprises Wardha Solar (Maharashtra) Private Limited, Kodangal Solar Parks Private Limited and Adani Renewable Energy (Rj) Limited, 3. Adani Transmission Step-One Limited (ATSOL), Adani Transmission Restricted Group 1 (AESL RG1), which comprises Barmer Power Transmission Service Limited; Raipur-Rajnandgaon-Warora Transmission Ltd; Sipat Transmission Limited; Thar Power Transmission Service Limited; Hadoti Power Transmission Service Limited; Chhattisgarh-WR Transmission Limited, and 5. Adani Electricity Mumbai Limited (AEML).

Adani Ports and Special Economic Zone Limited (APSEZ) and Adani International Container Terminal Private Ltd (AICTPL) have also been subjected to an outlook change from stable to negative, Moody’s said.

Moody’s said its rating actions follow the indictment of Adani Green Energy Ltd’s (AGEL) chairman Gautam Adani and several senior management team members by the US Attorney’s Office in a criminal case and the filing of charges by the US Securities and Exchange Commission (SEC) in a civil case. The charges and allegations include: (1) bribery of Indian government officials, (2) securities and wire fraud, (3) conspiracy to violate the US Foreign Corrupt Practices Act and obstruct justice, (4) false statements made in AGEL’s annual reports, and (5) false statements made to the US government in relation to its investigation into the group.

Identifying governance risks as material for its rating action, Moody’s said the negative outlook considers that this indictment of Mr. Adani and other senior Adani executives “will likely weaken Adani Group’s access to funding and increase its capital costs” and recognises “the possibility of broader weaknesses in the governance structure across the rated Adani group entities as well as potential operational disruptions, including on their capital spending plans, while legal proceedings are going”.

“Although the allegations and the charges made by US Attorney’s Office and SEC pertain to AGEL’s chairman and senior management team members, we believe they 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,” it reasoned.

The firm said an upgrade of these firms’ ratings is unlikely in the near term, given the negative outlook on all seven issuers. “However, we could change the rating outlooks to stable if legal proceedings conclude clearly with no material negative credit impact,” it noted, adding that the rated firms could also be subjected to downgrades based on specific risks relating to each business, including “access to funding” challenges that may arise for a couple of them.

The latest Fitch Ratings has cited a recovery in consumer spending and increased investment. File photo
| Photo Credit: The Hindu

Fitch Ratings on Tuesday, June 18, 2024, raised India’s growth forecast for current fiscal to 7.2 per cent, from 7 per cent projected in March, citing a recovery in consumer spending and increased investment.

For the fiscal years 2025-26 and 2026-27, Fitch projected growth rates of 6.5 per cent and 6.2 per cent, respectively.

“We expect the Indian economy to expand by a strong 7.2 per cent in FY24/25 (an upward revision of 0.2 pp from the March GEO),” Fitch said in its global economic outlook report.

Fitch’s estimates are in line with that of RBI which earlier this month projected Indian economy to expand 7.2 per cent in the current fiscal on the back of improving rural demand and moderating inflation.

Investment to continue, consumer spending to pick up

Investments will continue to rise but more slowly than in recent quarters, while consumer spending will recover with elevated consumer confidence, it said.

Fitch said purchasing managers survey data point to continued growth at the start of the current financial year.

It said signs of the coming monsoon season being more normal should support growth and make inflation less volatile, though a recent heatwave poses a risk.

“We expect growth in later years to slow and approach our medium-term trend estimate,” it said, adding growth will be driven by consumer spending and investment.

The Indian economy grew 8.2 per cent in the last fiscal (2023-24), with a 7.8 per cent expansion in March quarter.

Inflation, Fitch expects, will decline to 4.5 per cent by end 2024 and average 4.3 per cent in 2025 and 2026.

Fitch said it expects the RBI to cut policy interest rates by 25 basis points this year to 6.25 per cent.

New Delhi:

Fitch Ratings on Thursday retained India’s growth forecast for the current fiscal at 6.3 per cent saying the Indian economy continues to show resilience despite tighter monetary policy and weakness in exports, but upped year-end inflation projection on El Nino threat.

The Indian economy grew 7.8 per cent in the April-June quarter of current fiscal on strong services sector activity and robust demand.

“The Indian economy continues to show resilience despite tighter monetary policy and weakness in exports, with growth outpacing other countries in the region,” Fitch said, while projecting 6.3 per cent growth for current fiscal, and 6.5 per cent for next fiscal.

In its September update of the Global Economic Outlook Fitch, however, said that high-frequency indicators suggest that the pace of growth in the July-September quarter is likely to moderate.

Growth in the July-September quarter is likely to moderate as exports continue to weaken, credit growth flatlines and the Reserve Bank of India’s latest bimonthly consumer confidence survey shows consumers becoming a little more pessimistic on income and employment prospects, Fitch said.

On the price front, it said that the temporary increases in inflation, in particular rising food inflation, in coming months could curb households’ discretionary spending power.

“The inflation impact on consumers may be temporary but other more fundamental factors are weighing on the economy.

“India will not be immune to the global economic slowdown and the domestic economy will be affected by the lagged impact of the RBI’s 250bps of hikes in the past year, while a poor monsoon season could complicate the RBI’s control of inflation,” Fitch said.

Annual headline inflation was 6.8 per cent in August after 7.4 per cent in July and 4.9 per cent in June.

“The increase in inflation in recent months has been driven largely by a sharp increase in the price of tomatoes and other food products,” Fitch said.

Notwithstanding the risk of higher food prices, Fitch maintained its RBI’s benchmark interest rate forecast at 6.5 per cent for the end of this calendar year.

The government has reacted by importing greater quantities of food (especially tomatoes), temporarily scrapping the import duty on wheat and restricting sugar exports, it said.

The RBI expects annual CPI inflation to moderate in coming months given the short-term nature of vegetable price shocks.

“Nevertheless, the threat of El Niño means that inflation could exceed our forecasts, although the impact on consumers and the economy is likely to be temporary,” Fitch said, adding it expects 2023-end retail or CPI inflation at 5.5 per cent, higher than our previous forecast of 5 per cent.