BofA initiates Adani Group bonds with Overweight; cities solid fundamentals amid scrutiny

Bank of America (BofA) Global Research has launched credit coverage on several Adani Group US dollar bonds, assigning Overweight ratings across select issuances. The US investment bank’s analysis cites the conglomerate’s 'solid fundamentals' and "robust funding access" despite ongoing regulatory scrutiny and the tightening of bond spreads over the year. This marks a notable endorsement for Adani Group amid continued market attention following previous controversies.

BofA’s report outlines that the Adani Group has maintained resilient operational expansion and reliable market access, leading to an unchanged credit rating. According to BofA, "The group showcased operation, expansion and market access amid global scrutiny; ratings stayed put," reinforcing investor confidence in the group’s credit profile. Furthermore, BofA stated that Adani’s solid asset base anchors cash flow and credit profile' across its ports, utilities, and renewable energy businesses.

The bank's analysis highlights the group’s financial performance, noting a FY25 Ebitda of ₹898 billion (around $10.5 billion), with over 80% of earnings derived from core infrastructure sectors. The group’s net debt-to-Ebitda ratio has improved to 2.6 times, down from 3.8 times in FY2019, reflecting significant deleveraging over recent years.

BofA observed that Adani successfully raised more than US$6 billion in the past year through a combination of refinancing and equity infusions. In addition, India’s securities regulator SEBI has cleared 22 out of 24 investigations into Adani companies, and both Fitch and S&P have either restored or maintained stable to positive outlooks for the group’s credit standing.

Taking a closer look at individual entities, Adani Ports (ADSEZ), India’s largest private port operator, reported a FY25 Ebitda of Rs 184 billion, representing a 14% year-on-year increase. The subsidiary aims to double its capital expenditure to Rs 150 billion while maintaining a leverage ratio of 2.4 times.

Other notable Adani Group entities include Adani International Container Terminal (ADINCO), which, through its joint venture with MSC, operates at a 54% margin and targets a leverage reduction to 1 times by FY2028. Adani Transmission (ADTIN), the country’s leading private power transmission utility, currently maintains a leverage ratio of 5 times, coverage above 2 times, and stable regulatory cash flows.

Adani Electricity Mumbai (ADANEM) operates with regulated returns of 15–17% and a leverage ratio of 3.8 times, with the Qatar Investment Authority holding a 25.1% stake. Adani Green Energy (AGEL RGs), in partnership with TotalEnergies, benefits from secured renewable assets and long-term counterparties, further enhancing the group’s credit stability.

While the overall assessment remains positive, BofA flagged potential risks including outcomes from ongoing legal proceedings, aggressive expansion strategies, and macroeconomic pressures such as rising global interest rates. The report also cautioned that any resurgence of governance-related issues could adversely affect market sentiment.

BofA described Adani Group as a high-quality infrastructure credit, citing “steady deleveraging, stable credit ratings, and durable funding access” as justification for its Overweight rating, stating the group offers relative value compared to Asian peers.