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The recent equity raising by Adani Energy Solutions will reduce leverage to below previous forecast and the lower leverage and demonstrated access to equity and debt markets, if sustained, will support its credit profile, Fitch Ratings said.
Last week, Adani Energy raised $1 billion through a QIP that was subscribed to by over 100 global institutions.
The rating agency expected the additional equity to bring the company’s EBITDA net leverage in FY25 to around 5.5x from 5.6x in FY24, compared with its previous expectation of a temporary rise above 6x, the level at which a negative rating action could be considered. “This is based on the expectation that the equity raised will reduce the need for additional borrowing, which we assumed in our previous rating case,” Fitch said.
It forecasts capex to increase to ₹15,500 crore a year in FY25 and FY26, driven by Adani Energy’s smart metering business. AESL has won the bid to install more than 20 million smart meters and targets maintaining a market share of around 20 per cent.
Lower leverage would increase headroom in AESL’s ‘BBB-‘ rating and support its credit profile.
The rating agency said it expected leverage to fall to below 4.5x in FY26 from the previous forecast of 5.1x, although this depended on the pace of capex as well as cash generation from the smart metering business and transmission projects being built.
The funds raised will be used by the utility for capex for its smart metering and power transmission businesses, debt reduction, and other general corporate purposes. The primary equity raised will reduce AESL’s shareholding concentration, albeit marginally, as the Adani group’s shareholding will fall to around 69 per cent after the transaction from 74.9 per cent, a level close to the regulatory ceiling of 75%, Fitch observed.
Fitch said the equity raising demonstrates AESL’s access to capital markets and was in line with its view that risks to AESL’s funding access and costs from alleged governance issues at Adani group have eased. “We would consider any significant impact on the group from the ongoing investigation as an event risk.”
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