Fitch Ratings Affirms 'BBB-' Rating On Adani Ports With Stable Outlook

Fitch Ratings on Thursday affirmed its 'BBB-' rating on Adani Ports and Special Economic Zone Limited with a stable outlook, saying the Hindenburg report has a limited near-term impact on APSEZ's cost of funding.

Hindenburg Research in a January 24 report accused Adani group of "brazen stock manipulation and accounting fraud" and using a number of offshore shell companies to inflate stock prices.

The group has dismissed the charges as lies, saying it complies with all laws and disclosure requirements.

"Fitch Ratings has affirmed India-based port operator Adani Ports and Special Economic Zone Limited's (APSEZ) Long-Term Foreign-Currency Issuer Default Rating (IDR) at 'BBB-'. The Outlook is Stable," it said.

The Hindenburg report alleging significant governance issues for the Adani Group has triggered a sharp fall in Adani Group entities' equity and bond prices.

"The affirmation reflects its view that the Hindenburg report alleging governance issues at the Adani group has a limited near-term impact on APSEZ's cost of funding and access at the current rating level," Fitch said.

The rating agency said it expects APSEZ's financial flexibility to remain supported by its robust portfolio of seaports, which comprises strategically located assets with best-in-class operational efficiency and an adequate liquidity position.

"APSEZ's internal cash surplus is sufficient to cover its near-term operations and debt obligations as well as its budgeted capex," Fitch noted.

According to Fitch, about half of APSEZ's cargo is sticky, which includes contractual take-or-pay cargo, cargo that is unlikely to be diverted to other ports due to infrastructure restrictions, such as the lack of facilities to handle crude oil and cargo from joint-venture partners.

It noted that APSEZ has timing flexibility in its expansion projects.

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