Adani Group stocks crashed again on Thursday morning after the flagship company, Adani Enterprises (AEL), on Wednesday called off its Rs 20,000 crore follow-on public offering (FPO).
On Thursday, shares of the group's flagship firm - Adani Enterprises - crashed over 26.50% to hit a low of Rs 1,564.70 on the BSE. Adani Enterprise had closed 28% lower on Wednesday as well.
Adani Ports (APSEZ) slumped 6% to close at Rs 462 on Thursday. It hit a fresh 52-week low of Rs 423 during the trading session.
Six stocks (Adani Total Gas, Adani Green, Adani Transmission, Adani Wilmar, Adani Power, and NDTV) were locked in at their respective lower price bands. Only the cement entities- ACC and Ambuja - closed in green.
As per early estimates, Adani Group’s combined market capitalisation has now fallen by more than $100 billion in the past six sessions, one of the biggest meltdowns in Indian corporate history.
The share fall is also attributed to a few global financial institutions cutting their dealings with the Group after the U.S.-based activist investor firm Hinderburg Research accused the port-to-power conglomerate of pulling the “largest con in corporate history” by engaging in “brazen stock manipulation and accounting fraud” over the course of two decades. The Adanis have called the Hindenburg report “maliciously mischievous and unresearched” and said it was evaluating legal action.
According to reports, Citigroup’s wealth arm has now stooped accepting securities of Adani Group firms as collateral for margin loans. This comes after Credit Suisse Group assigned a zero lending value for notes sold by Adani Ports and Special Economic Zone, Adani Green Energy and Adani Electricity Mumbai Ltd.
Meanwhile, BSE benchmark Sensex closed 224 points higher at 59,932 while the NSE benchmark Nifty50 closed 6 points lower at 17,610. Nifty50 index is being dragged by two Adani firms: AEL and APSEZ.
Vinod Nair, Head of Research at Geojit Financial Services, “Despite a growth-oriented budget, drop in crude prices and upside in the global market, the domestic market is not able to gain because of the Adani saga having a ripple impact on the investors. In addition, the premium valuation of India continues to weigh down the performance compared to other emerging markets which are expecting an upside in the economy. The global markets are positive in an assumption of being in the last phase of the rate hikes."
What came earlier:
Adani Enterprises withdraws its FPO
Adani Enterprises (AEL) on late Wednesday announced that it has decided not to go-ahead with the fully subscribed Follow-on Public Offer (FPO). This development came a day after the Rs 20,000 crore FPO barely managed to sail through.
It also came after Adani Group stocks got hammered on Wednesday with AEL shares closing 28% lower at Rs 2,128.70. This was below the FPO price band of Rs 3,112-3,276 per share.
The FPO received a poor response from retail investors and employees. It got fully subscribed after the last hour's big bidding made by high-net-worth individuals.
Investors’ interest paramount and everything is secondary: Gautam Adani
On the decision to withdraw the FPO, Adani Group chairman Gautam Adani said that to insulate the investors from potential losses they have withdrawn the FPO.
“After a fully subscribed FPO, yesterday’s decision of its withdrawal would have surprised many. But considering the volatility of the market seen yesterday, the board strongly felt that it would not be morally correct to proceed with the FPO,” said Gautam Adani in a statement to AEL investors. “For me, the interest of my investors is paramount and everything is secondary. Hence to insulate the investors from potential losses we have withdrawn the FPO,” he added.
The billionaire said that the decision will not have any impact on existing operations and future plans. Gautam Adani also said that they working with our Book Running Lead Managers (BRLMs) to refund the proceeds received by them in escrow and return the same to investors.
One-third market cap wiped out in one week
Adani Group stocks crashed up to 35% on Wednesday and the port-to-power conglomerate’s market capitalisation (m-cap) fell by Rs 7.44 lakh crore in five consecutive trading sessions, translating to a loss of one-third value in total. The combined m-cap of the Adani Group stocks at the end of Wednesday's session stood at Rs 11.76 lakh crore from Rs 19.20 lakh crore (closing value as of January 24).
This is expected to fall further given most Adani stocks collapsed again on Thursday, wiping out billions of dollars for the market.
Mukesh Ambani overtakes Gautam Adani as Asia’s richest
Following this crash, Adani Group chairman Gautam Adani lost his Asia’s richest billionaire title to arch-rival Mukesh Ambani, chairman of Reliance Industries Ltd.
According to Forbes Real Time Billionaire Index, Adani’s wealth depreciated by $14 billion on Wednesday to $74.7 billion and he was placed at the 15th spot on the global rich list. Adani’s wealth had sky-rocketed to over $150 in 2022 when he became the world’s second richest billionaire. Forbes estimated Ambani’s wealth at $83.3 billion, making him the world’s 9th richest.
On Thursday morning, Forbes estimated Adani’s wealth to have come down to $64.6 billion.
Collateral Damage: Banking stocks and Life Insurance Corporation of India (LIC)
The fresh fall has also triggered selling across financial stocks with shares of public sector banks which have exposure to the Adani Group. Share prices of insurance giant LIC (a major shareholder in Adani Cos) have also taken a major hit.
State Bank of India, Bank of Baroda, Canara Bank, Punjab National Bank, Union Bank of India, Indian Bank and Indian Overseas Bank fell in the range of 5 to 10% on Wednesday. LIC closed 8% lower to Rs 601. On Thursday as well, most of these stocks were trading with minor cuts.