Indian billionaire Gautam Adani’s ports-to-power conglomerate is “deeply overleveraged,” with the group investing aggressively across existing as well as new businesses, predominantly funded with debt, CreditSights, a Fitch Group unit, said in a report. The aggressive expansion pursued by the Adani Group, led by Asia’s richest person, has put pressure on its credit metrics and cash flow, CreditSights said in the report Tuesday, adding that “in the worst-case scenario” it may spiral into a debt trap and possibly a default.
“We see little evidence of promoter equity capital injections into the group companies, which we feel is needed to reduce leverage in their stretched balance sheets,” the agency said, referring to fund infusions from the Adani Group’s founders, known as “promoters” in India. A representative for the Adani Group didn’t immediately respond to a request for comment on the report. All seven listed Adani firms declined by 2% to 7% in trading Tuesday.