S&P Global Ratings downgrades ANI Tech to 'CCC', flags risk of covenant breach

New Delhi, Dec 11 (PTI) S&P Global Ratings on Thursday downgraded ratings on ANI Technologies, which operates OLA Cabs, to vulnerable to nonpayment status 'CCC' with negative outlook, saying the company faces heightened risk of a covenant breach as its cash buffer diminishes.

Cash and equivalents of ANI Technologies (ANI Tech) are "estimated to fall below Rs 2.0 billion (Rs 200 crore) in the fourth quarter of fiscal 2026 (year ending March 2026) amid ongoing operating losses," S&P Global Ratings said in a statement.

ANI Tech faces a heightened risk of a covenant breach as its cash buffer diminishes, it noted.

The ratings agency further said, "ANI Tech will likely breach its financial covenant when it is tested on March 31, 2026. The company needs to maintain at least 40 per cent of its outstanding term loan B as cash and equivalents on its balance sheet. This amount would be about Rs 2.4 billion (Rs 240 crore), given the outstanding term loan B amount of Rs 6.0 billion (Rs 600 crore)." Stating that ANI Tech's operating losses will continue to derail its recovery path, S&P Global Ratings said, "We expect the company's adjusted EBITDA loss will rise to Rs 5.9 billion (Rs 590 crore) in fiscal 2026. This is on the back of shrinking revenues due to low take rates and continued high spending on incentives to defend market share in its ride-hailing business." S&P Global Ratings pointed out that OLA Cabs is losing market share to Uber and Rapido, and heightened competition in India's ride-hailing industry is likely to continue.

"The company's current market share in the four-wheeler segment in India has dwindled to 20-25 per cent, compared with more than 50 per cent two years ago. Consequently, we expect its revenue to decrease 25-27 per cent year over year in fiscal 2026," it said, adding, "We believe ANI Tech has limited ability to withstand cash burn without additional capital".

Larger peers such as Uber have stronger balance sheets and can remain competitive with incentives and discounts for drivers and consumers, respectively, to grow and maintain their strong market share, it added.

Stating that ANI Tech has limited options to increase its liquidity buffer, S&P Global Ratings said, "The company had predominantly relied on equity funding over the past decade; it has a limited record of funding through banks." The ratings agency further said while ANI Tech has a 3.64 per cent stake in Ola Electric Mobility Ltd (Ola Electric), "which we value at about Rs 4.5 billion (Rs 450 crore) after taxes. While share liquidation remains subject to market conditions, Ola Electric's operational challenges in recent quarters have contributed to its share price falling to all-time lows of about Rs 35 as of December 2025." This could dull ANI Tech's ability to liquidate the stake readily, it added.

Stating that ANI Tech has also continually delayed its IPO plans since 2020, S&P Global Ratings said, "A failure to secure an extension of the IPO deadline from its compulsorily convertible preference shares (CCPS) holders would mean the CCPS holders could exercise their exit rights in the absence of an IPO." It further said, "ANI Tech had about Rs 195 billion (approximately USD 2.3 billion) in CCPS outstanding as of March 31, 2025, accounting for about 95 per cent of the company's adjusted debt." The ratings agency said the negative rating outlook reflects its view of "ANI Tech's weakening liquidity amid the ongoing cash burn and the risk of a breach of its financial covenant in the next six months." It further said, "We could lower our ratings on ANI Tech if the continued cash burn leads us to believe the company will face an almost certain risk of a liquidity event or a covenant breach." Further, S&P Global Ratings said, "We could also downgrade the company if it decides to undertake a debt exchange offer or other transaction that we would view as offering its lenders less than they were originally promised." PTI RKL SHW