Adani Group Ratings Upgraded to 'Stable' by Moody's & S&P

Introduction

In a significant development for the Adani Group, international rating agencies Moody's and S&P have upgraded the outlook for several of its portfolio companies to 'Stable' from 'Negative'. This move aligns their assessment with that of Fitch Ratings, which had already affirmed a 'Stable' outlook in 2023. The synchronized positive revision from all three major global agencies signals renewed confidence in the group's credit quality, financial stability, and operational resilience following a period of intense scrutiny.

A Unified Vote of Confidence

The upgrades from Moody's and S&P, announced in January and February 2024 respectively, serve as a strong endorsement of the Adani Group's financial management and governance. The agencies highlighted the conglomerate's demonstrated ability to secure funding from diverse sources at reasonable costs. This includes successful debt refinancing, new loan facilities, and significant equity investments from institutional investors like GQG and the Qatar Investment Authority. The actions underscore the market's restored faith in the group's long-term viability and growth prospects.

Rationale Behind the Upgrades

Both Moody's and S&P provided clear reasoning for their revised outlooks. S&P, in its January 2024 release, noted that the conclusion of most regulatory investigations without evidence of wrongdoing has substantially reduced downside risk. The agency pointed to the repayment of promoter loans linked to shares and the successful raising of new capital as proof of restored funding access. Similarly, Moody's February 2024 statement emphasized the group's continued access to both debt and equity markets. It also referenced the Indian Supreme Court's decision to entrust the Securities and Exchange Board of India (SEBI) with completing its investigation, a move that curbed potential tail risks.

Navigating Past Challenges

The positive rating actions are particularly noteworthy given the challenges the Adani Group has faced since early 2023. The conglomerate came under intense global scrutiny following a short-seller report, which led to regulatory probes in India and attention from U.S. authorities. However, the group has systematically addressed concerns by deleveraging, improving transparency, and securing new lines of credit and equity. The recent ruling by SEBI, which found no violations of disclosure norms, further helped in alleviating investor concerns and paving the way for these rating upgrades.

Summary of Key Rating Actions

The upgrades span across the Adani Group's key business verticals, including ports, energy, and electricity distribution. The consistent 'BBB-' or 'Baa3' investment-grade ratings for several entities reflect their strong competitive positions and predictable cash flows.

Strong Financial Performance Underpins Confidence

The rating agencies' confidence is backed by the Adani Portfolio's robust financial performance. In the first half of the fiscal year 2026 (H1 FY26), the group reported its highest-ever half-yearly EBITDA of ₹47,375 crore. Trailing twelve months (TTM) EBITDA grew 11.2% year-on-year to reach ₹92,943 crore. This performance was achieved while executing a significant capital expenditure program, with capex in H1 FY26 reaching ₹67,870 crore. Group CFO Jugeshinder Singh noted that the company's debt metrics remain within the guided range despite the accelerated capex, reflecting strong financial discipline.

Market Reaction and Stock Performance

The news of the rating upgrades was received positively by the stock market. On the day of the announcements, most Adani Group stocks traded higher, bucking a weaker broader market trend. The flagship company, Adani Enterprises, saw its shares rise by as much as 1.8%. Other group companies, including Adani Energy Solutions, Adani Green Energy, and Adani Ports, also registered gains between 1% and 3%, indicating strong investor approval of the development.

Analysis and Forward Outlook

The uniform 'Stable' outlook from Fitch, Moody's, and S&P is a crucial milestone for the Adani Group. It effectively reduces the perceived contagion risk across its entities and is expected to lower the cost of borrowing for future projects. This improved access to international capital is vital as the group continues its ambitious ₹1.5 lakh crore capex plan, which is aligned with India's broader infrastructure growth story. The upgrades validate the group's strategy of focusing on operational excellence and maintaining financial discipline while navigating external challenges.

Conclusion

The series of rating outlook upgrades to 'Stable' by all major international agencies marks a significant turnaround for the Adani Group. It reflects the effectiveness of its strategic responses to market concerns and highlights the fundamental strength of its core infrastructure assets. With restored confidence from the global financial community, the group is well-positioned to continue its expansion and contribute to India's infrastructure development goals.