InvestorQ : Why has Fitch expressed concerns about the Adani group debt?
Dhwani Mehta made post

Why has Fitch expressed concerns about the Adani group debt?

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Dilmini Mercia answered.
2 months ago
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The concerns over the debt position of Adani group were actually raised by a unit of Fitch, Credit Sights, which largely operates as an arm’s length independent unit. However, it did look like the report set the cat among the pigeons. The report by Credit Sights has red-flagged the Adani group for its high levels of leverage and relatively low coverage ratios. It also pointed out that compared to the debt levels, the company was very richly valued.

In the aftermath of this report, most of the Adani group stocks corrected by 5-6%, although most of the stocks have recovered the day after. Credit Sights believes that in a worst-case scenario, the Adani group could either spiral into a debt trap or into a total default. The Adani group companies are closely held and hence the limited float in the market has made the group stocks especially attractive. However, one must not forget that the Adani group stocks have been among the sharpest value creators in the last 2 years.

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