BofA Initiates Coverage on Adani Group with ‘Overweight’ Rating, Cites Strong Fundamentals

Bank of America (BofA) Global Research has initiated credit coverage on the Adani Group, assigning Overweight recommendations across several of its bonds. The U.S. investment bank’s analysis cites the conglomerate’s robust fundamentals, resilient operations, and intact funding access — a strong endorsement amid continued scrutiny following past controversies.

Solid Financials and Improved Leverage

According to the BofA report, Adani Group’s FY25 EBITDA reached ₹898 billion (approximately US$10.5 billion), with more than 80% stemming from its core infrastructure businesses. The Group’s net debt-to-EBITDA ratio improved to 2.6×, down from 3.8× in FY2019 — signaling significant deleveraging.

BofA noted that Adani has successfully raised over US$6 billion through a mix of refinancing and equity infusions over the past year. The report also highlighted that India’s securities regulator SEBI has cleared 22 of the 24 probes into Adani companies, and both Fitch and S&P have restored stable or positive outlooks for the group’s credit profile.

The note points to Adani’s active liability management — including bond buybacks exceeding US$400 million — which has helped narrow spreads and improve duration management. Despite the turbulence of 2023’s short-seller report and a 2024 U.S. Department of Justice indictment, no major credit downgrades have occurred across the past three years.

Adani Ports (ADSEZ): India’s largest private port operator reported FY25 EBITDA of ₹184 billion, up 14% year-on-year. The company plans to double its capex to ₹150 billion while maintaining leverage at 2.4×.

Adani International Container Terminal (ADINCO): A joint venture with MSC, the company operates at a 54% margin and is expected to reduce leverage to 1.0× by FY2028.

Adani Transmission (ADTIN): The country’s leading private power transmission utility maintains a leverage ratio of 5.0×, with coverage above 2× and stable regulatory cash flows.

Adani Electricity Mumbai (ADANEM): With Qatar Investment Authority holding a 25.1% stake, ADANEM operates with regulated returns of 15–17% and a leverage ratio of 3.8×.

Adani Green Energy (AGEL RGs): Joint ventures with TotalEnergies, these renewable projects benefit from secured assets and long-term counterparties.

Resilient Funding and Market Outlook

BofA highlighted that systemic risks remain contained and that the group continues to enjoy robust access to both domestic and international funding. Adani’s bonds are currently trading wider than Asian investment-grade peers, which, according to BofA analysts, presents a potential tightening opportunity of 20–40 basis points as markets reassess the governance discount priced into Adani debt.

Risks and Outlook

While optimistic, BofA flagged potential risks including any adverse ruling in the ongoing DOJ case, aggressive expansion plans, or macroeconomic pressures from rising global interest rates. It also cautioned against any resurgence of governance-related allegations, which could impact market sentiment.

Summing up, BofA described the Adani Group as "a high-quality infrastructure credit" underpinned by steady deleveraging, stable credit ratings, and durable funding access. The bank’s selective Overweight calls, it said, were justified by the group’s relative value versus Asian peers and consistent improvements in cash flow visibility and balance sheet strength.