Adani Energy's Equity Fundraise To Lower Leverage, Support Credit Profile, Says Fitch
A temporary rise above 6.0 time would have made Fitch to consider negative rating action on the company.
Adani Energy Solutions Ltd.'s recent equity fundraise has helped lower leverage below Fitch Ratings' earlier forecast, ultimately supporting its credit profile, according to the rating agency.
The additional funds raised from equities will bring Ebitda net leverage to around 5.5 times in the current financial year, compared to Fitch Ratings' previous expectation of a temporary rise above 6.0 times, which could have led to a negative rating action from the rating agency, it said.
Fitch expects Ebitda net leverage to fall below 4.5 times in fiscal 2026, down from the agency's previous forecast of 5.1 times.
Fitch Ratings has penned down a capital expenditure of Rs 15,500 crore in fiscal 2025 and 2026 based on the company's smart metering business.
"Lower leverage would increase headroom in Adani Energy Solutions's ‘BBB-‘ rating and support its credit profile," Fitch Ratings said.
The fall in leverage, however, depends on capital expenditure, the pace of cash generation from the smart metering business, and transmission projects being built, according to the Fitch Rating Agency.
Leverage is when a company uses borrowed capital to expand, acquire new businesses, and operate.
Adani Energy Solutions raised Rs 8,373 crore on Monday via qualified institutional placement. The company will use the fund to invest in transmission assets, smart metering businesses, and debt repayment.
The recent equity fundraise shows that risk to access capital markets ever since cost alleged from governance issues at Adani Group has eased, in line with the Fitch Rating Agency's view.
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