Adani group stocks continue to plummet – lose ₹31,534 crore in market capitalisation on Monday

• Adani group stocks continued to be under intense selling pressure on Monday, with the group’s market capitalization registering a decline of ₹31,534 crore during the day.
  
• Five out of the nine companies of the group hit their respective lower circuits.
  
• Adani Enterprises’ stock was down over 6% in the first half of trading, but later recovered to end lower by 0.98%.
  

Adani group stocks continued to be under intense selling pressure on Monday, with the group’s market capitalization declining ₹31,534 crore during the day, taking the total rout in market cap to ₹10.88 lakh crore since the Hindenburg report was released on January 24.

On Monday, five out of the nine group companies hit their respective lower circuits. Adani Enterprises’ stock was down over 6% in the first half of trading, but later recovered to end 0.98% lower. The selling spree in the Adani group stocks returned on Monday despite four out of the nine companies registering a rebound on Friday.


Source: NSE, current market price as at 3:30 p.m., February 6, 2023

A year’s gains wiped out in a few days

A Business Insider India analysis found that the Adani group’s gains of 2022 have been completely wiped out since January 24. Gautam Adani’s net worth in this period fell by $60 billion, taking him from the third richest man in the world to 21st on the Bloomberg Billionaires Index.

Adani stocks’ steep fall on the bourses has also led to finance minister Nirmala Sitharaman issuing a statement to calm nervous investors, saying that insurance and banking companies are “not overexposed” to the group.

"Yes, there have been occasional blips in the market, maybe small or big, but they do address issues like that. And I strongly believe that our regulators are seized of this matter,” Sitharaman said in an interview.

Markets regulator Securities and Exchange Board of India (SEBI), too, stepped in and said it has measures in place to address excess volatility in the stock market. This includes Additional Surveillance Mechanism (ASM).

“This mechanism gets automatically triggered under certain conditions of price volatility in any stock,” SEBI said on Saturday.

Stock exchanges BSE and NSE have put three Adani group companies — Adani Enterprises, Adani Ports & SEZ, and Ambuja Cements — under their short-term ASM. It means that intra-day trading would require a 100% upfront margin and is aimed at curbing speculation and short-selling in these stocks.

Adani Enterprises reportedly drops plans for ₹1,000 crore bonds issue

After calling off its ₹20,000 crore follow-on public offer, Adani Enterprises has reportedly pulled off its planned ₹1,000 crore bonds issue.

Multiple projects of the Adani group have also come under the scanner in the aftermath of the Hindenburg fallout.

According to reports, the group’s ₹23,000 crore Dharavi Redevelopment project, the ₹16,700 crore Navi Mumbai International Airport project, and the Navi Mumbai power distribution license are all under the scanner.

Adani group makes coupon payments on time

Adani group is said to have made scheduled coupon payments on outstanding US dollar-denominated bonds on Thursday, according to Reuters, which quoted a source with direct knowledge of the conglomerate's strategy.

Adani Ports & SEZ paid coupons, the two sources of Reuters, speaking on condition of anonymity, said. The source with knowledge of the firm's strategy said Adani Transmission also processed bond payments on Thursday.

Calculations showed that interest payments totaling around $24 million were due on February 2 on three bonds issued by Adani Ports & SEZ due to mature in 2031, 2032 and 2041, Reuters said.

Stock rout can impact Adani group’s ability to raise capital, says Moody’s

According to ratings agency Moody’s, the sharp decline in the Adani group’s market capitalisation could impact its ability to raise capital or refinance debt.

"Given the significant and rapid decline in the market equity values of the Adani group companies following the recent release of a short-seller report highlighting governance concerns, our immediate focus is primarily on assessing the rated entities' overall financial flexibility, including their liquidity position and access to funding to support refinancing and ongoing growth initiatives," Moody's said on Friday.

Fitch Ratings, on the other hand, said there is no immediate impact on the group’s credit ratings.

In the meanwhile, another global rating agency S&P cut the ratings of two Adani group companies – Adani Ports & SEZ, and Adani Electricity to ‘negative’ from ‘stable’.

“The negative outlook reflects the risk of a deterioration in the credit profile of Adani Ports and Adani Electricity Mumbai due to governance risks and funding challenges for the larger Adani group,” S&P said.

(With agency inputs)

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