Moody’s Investors Service has released a report that discusses the credit profile of India’s largest and most diversified conglomerate, Adani Limited. The report, which was issued in August 2020, found that despite the conglomerate’s large exposure to India’s banking sector, the exposure will not have a significant effect on credit quality.
Adani Limited is one of India’s largest conglomerates and has a significant presence in a variety of industries, including energy, resources, logistics, airport infrastructure, and agri-business. The company has been growing rapidly in recent years and is currently valued at over $ 252 billion.
Despite its size, Adani Limited’s exposure to the banking sector is not expected to have a significant effect on credit quality. According to the report, banks in India are well-equipped to absorb the risks associated with Adani’s exposure, as the conglomerate is a diversified business with a strong financial position.
Furthermore, Adani’s credit profile is supported by its strong liquidity and access to capital. Moody’s noted that Adani has a strong balance sheet that allows it to access the capital needed to support its growth. Additionally, the company’s liquidity position remains robust, with $6.5 billion in cash and cash equivalents at the end of June 2020.
Adani’s credit profile is also supported by its consistent earnings growth and low leverage. The company has managed to consistently grow its EBITDA and income from operations over the past few years, while its leverage has been flat to slightly improving. This is due to the company’s ability to generate returns well above its cost of capital.
Overall, Moody’s report found that Adani Limited’s exposure to India’s banking sector is not expected to have a significant effect on credit quality. The conglomerate’s strong liquidity position and access to capital, consistent earnings growth, and low leverage should mitigate any risks associated with its exposure to the banking sector.