Adani Group companies traded mixed in the market today. On the one hand, the Supreme Court ruled in favor of Adani Power, a power company owned by Adani. While this is a positive sign, on the other hand ICRA’s downgrading of Special Economic Zone rating of Adani Ports, the port company owned by Adani, is negative news. Since the beginning of Monday, due to one positive and one negative news for the Adani Group, the shares are also trading mixed.
Notably, ICRA revised the outlook on Adani Ports from stable to negative. On the other hand, as far as the shares of Adani Group companies are concerned, 6 out of 10 shares reached the upper circuit. Adani Ports gained nearly 3% today as Adani Power continued on the upper circuit.
Maharashtra State Electricity Distribution Company Limited (MSEDCL) filed a petition in the Supreme Court. Supreme Court granted relief to Adani Power in this case. MSEDCL challenged the Appellate Tribunal’s decision to authorize in favor of Adani Power. But the verdict in the Supreme Court also came in favor of Adani Power.
In 2008, MSEDCL signed long-term power purchase agreements with Adani Power Maharashtra. Under this agreement, there is a provision that any change in distribution system will be compensated in the form of change in monthly tariff payment.
After this, based on the tariff change in 2013, the company sought compensation, and then MSEDCL filed a petition in the Appellate Tribunal for Electricity, which approached the Supreme Court. MSEDCL filed two petitions in 2021.
Why has ICRA downgraded Adani Ports rating? After the American short seller Hindenburg Research report, Adani Group shares suffered a heavy decline. ICRA has revised its outlook from stable to negative due to deterioration in the group’s financial strength.
According to the rating agency, now the risk of regulatory / legal scrutiny on Adani companies has increased. Because of this, Adani Ports monitors credit quality. However, according to ICRA, the company’s liquidity profile remains strong. Additionally, the company’s business profile has also been strengthened by acquiring significant port assets and strategic assets in the logistics volume chain.
