‘Adani Group Looks Most Attractive Among India Corporates, No Signs Of Stress’: Nomura

Japanese brokerage Nomura has said Adani Group companies appear “most attractive” among Indian corporates. In a report this week, Nomura said the ports-to-power conglomerate will be able to withstand recent turmoil brought on by allegations by the US Department of Justice. It also said there were “no signs of stress” across the Adani Group, which last month firmly denied the US government department report alleging bribery for power contracts.

“Adani complex looks most attractive amongst other Investment Grade corporates from India. Other Indian Investment Grade corporates stay at expensive levels vis a vis Adani complex,” said the global brokerage. 

Nomura further said the Adani Group’s liquidity management awareness had improved meaningfully compared to a year back when the Hindenburg report surfaced.

” Adani Group’s liquidity management awareness has improved meaningfully and should be able to weather the rainstorm with adequate short-term liquidity position. Overall, no signs of stress across the Group. Asset quality remains intact,” it added.

“We believe the group should be able to weather this round of rainstorm,” said the financial research firm.

As far as global banks halting their financial support to Adani companies is concerned, Nomura expects that it will not be a problem when the matter regarding the US allegations settles down.

“Separately, big three Japanese banks plan to continue their relationship with Adani group,” it said.

The Department of Justice indictment is only an allegation, Nomura said, citing Adani Management. The allegation does not constitute any breach in anti-corruption covenants. It could indicate a breach if found guilty. Nomura did caution that “global banks might halt new financings in the short-term but should gradually resume in the long-term when the dust of the Adani-DoJ saga settles.”

Nomura expects an upside on bond prices for Adani Green Energy Ltd., Adani Ports and Special Economic Zone Ltd., Adani International Container Terminal, Adani Electricity Mumbai Ltd., Adani T-One Transmission Ltd., and Adani Renewable Energy Ltd.

For Adani Green Energy, the prices may go up to 7 points, for others it sees 2 to 4 points, said the Nomura report.

Last month, Adani Group flagged a wrong understanding of the US indictment for the “incorrect” reporting about the bribery charges, stating that it offered no evidence about the alleged exchange of bribes.

All three directors – Gautam Adani, his nephew Sagar Adani, and senior executive Vneet Jaain – are clear of bribery charges, Adani Green said in a stock exchange filing on November 27.

The statement said the indictment by the US Department of Justice includes five counts, but the first and fifth counts – conspiracy to violate the Foreign Corrupt Practices Act (FCPA) and conspiracy to obstruct justice – do not mention the three directors, the Adanis and Mr Jaain.

“The ill-founded US action and reckless false reporting have led to significant repercussions for the Indian conglomerate, such as international project cancellations, financial market impact, and sudden examination from strategic partners, investors, and the public,” the statement read.

The conglomerate has refuted the charges as “baseless”.