Selling off Adani's shares has decreased the company's market worth to less than 100 billion dollars.
Adani Group's 10 companies' combined equity market value dipped below the $100 billion mark amidst fears further fueled by a report from US short seller Hindenburg Research. This embattled conglomerate, known for its ports-to-power operations, is facing scrutiny from investors as it grapples to reinstate trust.
Since the Hindenburg report surfaced on January 24, the Adani Group has suffered an unprecedented market capitalization loss of over $136 billion. Moreover, ongoing equity selloff serves as a stark reminder that there's more work to be done to assuage concerns about the company's future funding.
Sameer Kalra, owner at Target Investing Mumbai, pointed out that capital expenditure and debt remain pressing issues that could continue weighing on appraisals. Despite these challenges, Adani Group is making strategic moves to regain investors’ confidence.
Recently, the group secured over $8 billion via international bond sales and sought at least the same amount in foreign-currency loans from global banks [1]. Rating agencies have also revised their outlook for some of Adani's companies, including Adani Green Energy Ltd. and Adani Ports & Special Economic Zone Ltd [1].
In a shift from their aggressive growth strategy of recent years, the group is now prioritizing financial health. Their focus lies on cash conservation, debt payment, and fulfilling promised shares as they strive to mitigate damage caused by Hindenburg's report.
On Tuesday, the group's stocks showed mixed performances. While the likes of Adani Enterprises Ltd., Adani Power Ltd., and Adani Ports traded either flat or showed minor declines, Adani Green, Adani Transmission, and Adani Total Gas Ltd. fell by 5% each, while Adani Ports rose by 2% [1].
Interestingly, the group's tax contributions increased dramatically by 29% in FY25, reaching ₹74,945 crore [2]. PSP Projects, one of the companies, showed moderate revenue growth, though net profit took a hit. Return ratios for the company reflect moderate profitability [3].
- Bloomberg: Adani Group Taps Investors for $8 Billion as Moody's Cuts Ratings on Two Units
- The Economic Times: Adani Group records 29% jump in tax contributions to government in FY25
- Business Standard: PSP Projects Q4 Profit Down By 58% At ₹13.05 Crore, Revenue Up By 0.46%
Last Updated: 22 February 2023
The Adani Group's priority shift towards financial health, focusing on cash conservation, debt payment, and share fulfillment, is a strategic move to rebuild investor confidence. Despite securing over $8 billion via international bond sales and seeking additional foreign-currency loans, the embarrassing market capitalization loss and ongoing scrutiny could impact the group's future business deals in finance and investing.
