Adani shares continue uncontrolled fall to zero
2023.02.03 02:34
Adani shares continue uncontrolled fall to zero
By Kristina Sobol
Budrigannews.com – After a critical report by a U.S. short-seller last week sparked a market rout, shares of Adani Group companies continued to fall in Mumbai on Friday, with their market value now more than halving to less than $100 billion.
The Indian conglomerate’s debt levels and use of tax havens were questioned by Hindenburg Research. Adani said that the report was unfounded and that its financials were still strong. However, the stock market crisis that followed has sparked broader concerns about the possibility of systemic effects.
Sources have told Reuters that the central bank has asked lenders for details about their exposure to the group, and lawmakers have called for a deeper investigation.
The group postponed its $2.5 billion share sale on Wednesday, which would have taken place at the height of the rout and was one of Chairman Gautam Adani’s biggest setbacks.
The flagship company of the group, Adani Enterprises Ltd., saw its share price plummet 35% in Friday trade to its lowest level since March 2021. Since last week, this brought losses to nearly $33.6 billion, a 70% decrease.
Adani Transmission Ltd. and Adani Green Energy Ltd. both lost 10%, while Adani Ports and Special Economic Zone Ltd. lost 14%. Adani Total Gas Ltd., a partnership with TotalEnergies SE in France, lost 5%.
“Contagion worries are getting bigger, but they still only affect the banking industry. According to Charu Chanana of Saxo Markets in Singapore, “focus remains on additional risks of index exclusions.”
S&P Dow Jones Indices announced on Thursday that it would remove flagship company Adani Enterprises Ltd. from widely used sustainability indices on February 7, making the shares less appealing to investors who are concerned about the environment.
According to Chanana, “If more indices remove Adani stocks, one of the major risk factors to watch for now is.” Funds selling Adani stocks may result in foreign outflows, aggravated confidence issues.
According to Hindenburg’s report, shares in seven Adani-listed companies have a 15% downside due to “sky-high valuations,” and key listed Adani companies have “substantial debt.” Additionally, stock manipulation was alleged.
The Adani Group claimed that the claim of stock manipulation had “no basis” and was caused by a lack of understanding of Indian law. It stated in its response that group companies have “consistently de-levered” over the past ten years.
The seven publicly traded companies that make up the Adani Group now have a combined market capitalization of $99 billion, compared to $218 billion prior to the Hindenberg report.
As Adani pursues global expansion in ports and power sectors, he has in recent years forged partnerships with foreign giants and attracted investment from them. The collapse in share prices marks a dramatic turn of fortune for Adani.
In addition, Adani is no longer Asia’s richest person, and Forbes ranks him 17th among the wealthiest people in the world. Elon Musk and Bernard Arnault came in ahead of the 60-year-old. Reliance Industries Ltd.’s Mukesh Ambani, an Indian rival, is now Asia’s richest person.
After falling on Thursday, the prices of Adani Group entities’ U.S. dollar bonds increased slightly on Friday.
After falling to a record low of 60.56 cents on Thursday, Adani Green’s bonds due in September 2024 increased by approximately 7 cents to 69.69 cents.
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