Adani Group firms see worst ever fall, AEL plunges 35 per cent
Some Adani Group stocks revived post the confident statement by TotalEnergies, a French energy company, raising the sentiment of the market.
Published: 03rd February 2023 11:12 AM | Last Updated: 04th February 2023 11:05 AM | A+A A-
MUMBAI: Shares of four Adani Group firms, including Adani Enterprises and Adani Ports, bounced back on Friday after facing a heavy drubbing in the past six days. The stock of Adani Enterprises rebounded 1.25 per cent to settle at Rs 1,584.20 apiece on the BSE.
During the day, it tumbled 35 per cent to Rs 1,017.10 -- its one-year low.
Shares of Adani Ports also bounced back and climbed 7.98 per cent to Rs 498.85 after falling 14.51 per cent to Rs 394.95 -- its one-year low -- during the day.
Ambuja Cements rallied 6.03 per cent and ACC climbed 4.39 per cent.
Some Adani Group stocks revived post the confident statement by TotalEnergies, a French energy company, raising the sentiment of the market, said Vinod Nair, Head of Research at Geojit Financial Services.
However, shares of Adani Transmission tanked 10 per cent, Adani Green Energy (10 per cent), Adani Power (5 per cent), Adani Total Gas (5 per cent), Adani Wilmar (4.99 per cent), NDTV (4.98 per cent).
Many of the group firms hit their lower circuit limits during the trade.
The 10 listed Adani Group firms have faced a combined erosion of over Rs 8.76 lakh crore in the past 6 days.
French energy giant TotalEnergies, which had in past years taken stakes in two Adani group listed firms, on Friday said it has not performed any re-evaluation of its holdings because of volatility in stock prices following allegations of fraud.
In a statement, the French firm said its investment in Adani group entities were undertaken in full compliance with the Indian laws and its own internal governance processes. The company has a 37.4 per cent stake in Adani Total Gas Ltd and a 20 per cent holding in Adani Green Energy Ltd.
OPINION | Defending Adani, critiquing Hindenburg
Adani late Wednesday cancelled a $2.5-billion stock sale meant to help reduce debt levels -- long a concern -- restore confidence and broaden its shareholder base.
"The board of Adani Enterprises Ltd., (AEL) decided not to go ahead with the fully subscribed FPO. Given the unprecedented situation and the current market volatility, the company aims to protect the interest of its investing community by returning the FPO proceeds and withdraws the completed transaction," the company said in a statement on Wednesday.
Adani Enterprises, the flagship company of Adani Group, had a lacklustre start to its FPO, with only 1 per cent subscription on the first day of the share sale.
The offer was opened for public subscription from January 27-31.
Meanwhile, the 30-share BSE benchmark Sensex zoomed 909.64 points or 1.52 per cent to settle at 60,841.88.
Investors have shunned the shares of seven of Adani Group's listed stocks since Hindenburg, a US short-seller, released a report accusing the group of stock manipulation and other irregularities. Hindenburg has also raised concerns about the group's mounting debts.
The conglomerate's combined market capitalisation has plummeted by more than $100 billion since US short-seller Hindenburg Research -- which makes money by betting on shares falling -- released an explosive report last week.
Adani himself has seen his fortune plummet by tens of billions of dollars, dumping him out of the real-times Forbes rich list top 10 and depriving him of his title as Asia's richest person.
Big banks including Credit Suisse and Citigroup have stopped accepting Adani bonds as collateral for loans to private clients, according to Bloomberg News.
That fuelled worries about how Adani will raise fresh funds, with Adani dollar bonds trading at distressed levels and signs of contagion in Indian markets increasing, Bloomberg reported.
According to Hindenburg Research, Adani has artificially boosted the share prices of its units by funnelling money into the stocks through offshore tax havens.
This "brazen stock manipulation and accounting fraud scheme" is "the largest con in corporate history", Hindenburg said.
Adani said it was the victim of a "maliciously mischievous" reputational attack and issued a 413-page statement on Sunday that it asserted showed Hindenburg's claims were "nothing but a lie".
Hindenburg said in response that Adani failed to answer most of the questions raised in its report.
Critics say Adani's closeness to Prime Minister Narendra Modi, also from Gujarat state, has helped him win business and avoid proper oversight.
Will there be a larger impact?
So far there has been no indication that the company’s woes might threaten the wider financial sector in India. Its equities market is large enough to sustain the fallout at this moment, said Brian Freitas, a New Zealand-based analyst with Periscope Analytics who has researched the Adani Group. “Adani stock forms a small part of the equities market and investor concerns right now are restricted to the company, not the whole system or market itself,” Freitas said.
On Friday, S&P Dow Jones said it will remove Adani Group's flagship firm Adani Enterprises from sustainability indices with effect from February 7. That might dent the Adani Group's sustainability credentials and could affect investor sentiment, Freitas said.
The Reserve Bank of India (RBI) on Thursday sought details about lenders' exposures to the Adani Group, banking sources said. On Wednesday, Swiss lender Credit Suisse stopped accepting bonds by Adani group companies as collaterals for margin lending.
The market watchdog, the Securities and Exchange Board of India, has not commented.
Adani, who made a vast fortune mining coal and trading before expanding into construction, power generation, manufacturing and media, was Asia's richest man and the world's third wealthiest before the troubles began with Hindenburg's report.
By Friday, his net worth had halved to $61 billion, according to Bloomberg’s Billionaire Index, where he dropped to the 21st spot worldwide.
Adani's speedy, debt-led expansion in recent years caused his net worth to shoot up nearly 2,000%.
Analysts say he has been successful at aligning his priorities with those of the government by investing in key sectors, but point out that he also has major infrastructure projects in states that are ruled by opposition parties.
As a company heavily involved in infrastructure -- from airports and ports to highways -- it needs financing to grow in order to service its debt, which stands at $30 billion, out of which $9 billion is from Indian banks.
Adani may be able to sell some assets and continue its expansion, but at a much slower pace than earlier, Aveek Mitra, founder of Avekset Financial Advisory, said.
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(With inputs from Express News Service, AP, AFP, and PTI)