The Adani Group, one of India's leading conglomerates, has been facing relentless downward pressure in its group stock prices. Despite efforts to address concerns raised by the US-based short-seller, Hindenburg Research, the hammering of Adani Group stocks seems to have no end in sight.
It has been exactly one month since Hindenburg Research made a slew of allegations against the Adani Group, which included accounting manipulation, high levels of debt, and violations of SEBI exchange rules. Since then, the group stocks have been in a state of decline.
Five days after the report came in, Credit Suisse stopped accepting bonds of Gautam Adani’s group of companies as collateral for margin loans to its private banking clients. The move followed Citigroup's wealth unit, which also stopped making margin loans to its clients against the securities of the Adani Group.
In an effort to regain the trust of investors, the Adani Group implemented several measures, such as prepaying its loans ahead of maturity, ensuring that the group companies faced no significant refinancing risk, and holding off fresh capital expenditure by scrapping a ₹7,017 crore deal to buy the thermal power assets of DB Power.
On February 06, Gautam Adani and his family pre-paid $1.11 billion worth of loans against the shares of three of the group's listed firms. This has helped in the release of 11.77 million shares in Adani Transmission Ltd. and 168.27 million shares in Adani Ports & Special Economic Zone Ltd., along with 27.56 million shares of Adani Green Energy Ltd., according to a Bloomberg report.
In addition to that, recently, on February 20, Adani Ports and Special Economic Zone repaid ₹1,000 crore to SBI Mutual Fund and ₹500 crore to Aditya Birla Sun Life Mutual Fund on commercial papers that matured. Further, the company said it would repay another ₹1,000 crore in commercial paper due in March.
Adani Ports is using its cash balance and business-generated funds to pay the short-term debt. Earlier, the company announced its plan to consider repaying a debt of approximately 50 billion rupees in the next fiscal year, starting in April. This move is expected to improve the company's net debt to EBITDA ratio to around 2.5 times from its current rate of slightly over 3 times.
Despite the conglomerate's efforts to restore confidence, it seems that the damage done by the allegations by Hindenburg was too great to recover quickly. In Friday's trade, 4 out of 7 group stocks were locked in the 5% lower circuit. Overall, the seven listed stocks lost another ₹1,31,640 crore in market cap this week, after losing nearly ₹93,000 crore in previous week, bringing the total market value below ₹6.5 lakh crore.
In a 100-page report on January 24, Hindenburg Research claimed that the Adani Group stocks were overvalued by almost 85%. A month after the report, three Adani Group stocks were seen to be approaching that mark.
|Scrip Name||Closing Price on Jan 24 (in Rs)||Closing Price on Feb 24 (in Rs)||(%) loss|
|Adani Total Gas||3,891||752||-80.67%|
|Adani Green Energy||1,916||487||-74.58%|
|Adani Ports and SEZ||761||559||-26.54%|
Shares of Adani Total Gas, Adani Green Energy, and Adani Transmission have lost 80%, 74.5%, and 74.2% of their value, respectively, in a month. From their 52-week highs, these three stocks have plummeted between 80% and 84%.
Other stocks, including Adani Power, Adani Enterprises, Adani Ports and SEZ, and Adani Wilmar, have lost 26–61% of their value in the same time period. Since the Hindenburg report was released, the seven Adani Group stocks have suffered a massive loss of Rs. 11 lakh crore in market value.
Adani Total Gas has been hit the hardest with a loss of Rs. 3,42,173 in market capitalization, followed by Adani Enterprises, Adani Transmission, and Adani Green Energy with a drop of Rs. 2,31,772 crore, Rs. 2,25,262 crore, and Rs. 2,23,002 crore, respectively.
Meanwhile, Gautam Adani, who was ranked as the third richest person globally at the start of January 2023 with a fortune of $121 billion, has slipped to the 29th position in the Bloomberg Billionaires Index as his wealth plunged to $41.5 billion.
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