Moody’s upgrades outlook on Adani Electricity Mumbai, Adani Transmission Step-One to stable

New Delhi: Moody’s Ratings on Thursday revised the outlook on Adani Transmission Step-One Ltd (ATSOL) and Adani Electricity Mumbai Ltd (AEML) to stable from negative, citing expectations of sustained liquidity and credit profiles consistent with their investment-grade Baa3 ratings over the next 12–18 months.

The ratings agency affirmed the Baa3 senior secured ratings on both ATSOL and AEML, and also reaffirmed AEML’s (P)Baa3 senior secured medium-term note programme.

Moody’s said the outlook revision reflects its view that the two companies will continue to maintain liquidity and financial metrics supportive of their ratings. For ATSOL, the affirmation also factors in its strong credit linkages with parent Adani Energy Solutions Ltd (AESL), including guarantees on bond issuances and default provisions linked to AESL’s credit profile.

According to Moody’s, AESL benefits from a diversified portfolio of regulated transmission and distribution assets, which supports stable operating performance. While the group is expected to undertake significant capital expenditure over the next two years, the agency believes AESL will take timely measures to protect key credit metrics. Funds from operations to net debt are expected to remain marginally above the 7.5 per cent tolerance threshold.

Separately, Moody’s said Adani Ports and Special Economic Zone Ltd (APSEZ) is also expected to retain solid access to liquidity and a credit profile aligned with its Baa3 rating over the next 12–18 months. APSEZ’s strong financial position is underpinned by discretionary growth capital expenditure and continued funding access.

For AEML, Moody’s highlighted stable and predictable cash flows from its regulated electricity distribution business in Mumbai, along with an improving financial profile following recent deleveraging. The agency expects AEML’s cash flow from operations, before working capital changes, to debt to remain in the 10.5–11.5 per cent range over the next one to two years.

Moody’s cautioned that ongoing US legal proceedings involving senior executives at another Adani group entity remain a key risk. Any material adverse developments could affect the group’s access to capital and growth plans.