NEW DELHI: Adani Group’s 10 listed firms delivered a total profit of Rs 3,616 crore in the quarter ending December 2022 (Q3FY23). This is a little less than one-fifth of profit after tax (PAT) reported by rival Reliance Industries (RIL) and one-third of PAT reported by Tata Group’s biggest firm TCS.
RIL, led by Mukesh Ambani, reported a profit of Rs 15,792 crore in Q3FY23 while IT giant TCS’ December quarter profit came at Rs 10,846 crore. Tata Group’s 6 listed firms, whose market capitalization is over Rs 50,000 crore, reported a combined net profit of Rs 13,622 crore and Tata’s 17 listed firms reported a combined net profit of Rs 14,864, according to quarterly earnings filed by firms.
Revenue per se, Tata was ahead of RIL and Adani in Q3FY23. Tata Group’s top 6 entities reported combined revenue of Rs 2.33 lakh crore during the quarter while RIL’s consolidated revenue came at Rs 2.20 lakh crore. Total revenue of 10-listed Adani firms stood at about Rs 74,000 crore during the quarter. The Gautam Adani-promoted Group has net debt of Rs 1.96 lakh crore while Mukesh Ambani’s RIL net debt was estimated at Rs 1.10 lakh crore by the end of December quarter.
Adanis, RIL and Tatas are the biggest conglomerates in terms of market capitalization (m-cap). The three Group’s businesses expand from FMCG/retail to power and they are often compared as who is spearheading India’s growth story.
While Adani Group’s profit is yet to reach the level of RIL or Tata, its m-cap at Rs 19.20 lakh crore on January 24 was only next to the Tata Group’s (only listed cos) Rs 21.74 lakh crore. RIL’s m-cap was at Rs 16.63 lakh crore on January 24.
However, a crash in Adani stocks following the stinging report by US-based short seller Hindenburg Research wiped out its m-cap by over Rs 10 lakh crore, pushing the valuation of its listed entities below Rs 9 lakh crore. The rout in Adani stocks is so intense that shares of its firms have plunged up to 75% since the report was published on January 24. Adani Total Gas, Adani Power, Adani Green Energy, Adani Transmission and Adani Enterprises scrips have taken maximum beating.
Hindenburg has accused the Group of stock price manipulation and lapses in corporate governance, among other things. This triggered a few global banks to stop accepting its bonds as collateral while rating agency Moody’s downgraded outlook of four Adani firms. The short-seller had said the Group’s 7 key listed firms have a 85% downside.
“It is difficult to predict the future trajectory of Adani stocks as they have become sensitive to news flow. Future negative development would lead to more bleeding while solid proof by the Group to deny the allegations may raise confidence among investors,” said research head of a Mumbai-based brokerage firm, requesting anonymity.
He added that the Group’s fundraising ability, servicing of debts and not compromising on capex plans will be the key factors to watch for. “Currently, it looks difficult for a few Group stocks to reach the pre-January 24 level anytime soon,” he said. On comparing Adani with Tata Group and RIL, the analyst noted the two other conglomerates are more stable and have a proven record of corporate governance.
“Adani Group’s topline and bottomline have grown at a brisk pace in past few years. However, it will still take a long time for them to reach the Rs 15,000 crore - level,” he said. Owing to its big size and high debt, the Group is facing increased scrutiny by the stock exchange, capital market regulator and the Supreme Court.
Adani Group, which has denied any wrongdoings, said their businesses have a long-standing track record of setting global performance benchmarks in their respective sectors, be it operational key performance indicators or EBITDA margins.