According to Fitch Group’s debt research unit CreditSights, India’s Adani Group, controlled by billionaire Gautam Adani, is “deeply overleveraged,” and its numerous investments in capital-intensive businesses may pose long-term risks to investors.
In a “worst-case scenario,” the conglomerate’s debt-financed growth plans might spiral “into a massive debt trap,” resulting in distress or default of its companies and the broader Indian economy, according to CreditSights.
An Adani Group spokeswoman did not react quickly to a request for comment. The grim assessment of Asia’s richest man’s company comes at a time when its group companies are investing in new areas like telecom, cement, and long-term infrastructure projects.
CreditSights stated in its analysis that the companies’ large debt poses a danger at a time when interest rates are high and due to the long gestation period of some infrastructure projects. It also identified “high key-man risk,” implying that senior management’s capacity in the absence of Gautam Adani may be insufficient.
Following the release of the research, shares in Adani Group companies like flagship Adani Enterprises, Adani Green Energy, Adani Ports, and Adani Power plummeted. The investigation estimated the conglomerate’s overall debt at Rs 2.3 trillion ($28.80 billion).
Adani Green shares, which had risen over 170% year to date, led the decline, plunging as high as 6.9%. Adani Power, which has more than fivefold increased in the last year, plummeted 5% to hit the lower circuit, which is the maximum amount a stock price can move in a single day