Adani Energy Solutions Ratings Affirmed but US Probe Looms over Outlook

Fitch Ratings affirmed Adani Energy Solutions' 'BBB-' ratings but removed them from 'Rating Watch Negative'. Despite improved funding access, the outlook remains negative due to ongoing US investigations into governance. The company's credit profile is bolstered by India's regulatory environment and expected growth in its transmission assets' revenue.

Fitch Ratings has affirmed Adani Energy Solutions' Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDRs) at 'BBB-', removing them from 'Rating Watch Negative'. In a statement issued Monday, Fitch noted the Adani group's improved funding access since certain board members of Adani Green Energy Limited (AGEL) were indicted in the US on 20 November 2024.

The global rating agency acknowledged a moderation in the liquidity and funding risks associated with the group. Despite this, the outlook remains negative, reflecting Fitch's concerns that the ongoing US investigations may reveal weaker corporate governance practices than anticipated, potentially leading to negative rating actions in the near to medium term.

Fitch will closely monitor these investigations for evidence of weakness in governance practices and the impact on Adani Energy Solutions' financial flexibility. The agency highlighted the credit profile benefits of India's stable regulatory environment. It expects substantial future revenue from the company's transmission assets, with contributions from its smart metering business increasing. Adani Energy Solutions is a major private-sector power transmission and distribution company in India, operating projects across 14 states and holding a significant stake in Adani Electricity Mumbai Limited.

(With inputs from agencies.)