Adani Enterprises Shares Rise, Other Group Stocks Extend Losses On Hindenburg Impact
Most shares of Adani group extended their steep decline on Monday as the Indian group dismissed criticism by a US short seller that it did not reassure investors, costing the companies huge losses. stock market losses amounted to $66 billion in three days.
Flagship Adani Enterprises, which is facing an important test this week with its next share offering, was up 4%, but below its initial gain of 10% and significantly below its price. offer for sale.
Adani, led by Asia’s richest man Gautam Adani, has been at odds with Hindenburg Research and on Sunday reacted to last week’s short sellers’ report, which raised concerns about debt levels and the use of tax havens. Adani said it complies with all local laws and has made the necessary regulatory disclosures.
Adani Transmission and Adani Total Gas are down 20% each on Monday, while Adani Green Energy is down 18%. Adani Power and Adani Wilmar each fell 5%, while Adani Ports and the Special Economic Zone fell 0.5%.
Adani Enterprises’ $2.5 billion secondary stock sale entered its second day amid weakening investor sentiment. Shares traded at Rs 2,892, much lower than the share sale price of Rs 3,112-3,276 per share.
On Friday, the first day of the offering, the issue was registered 1% amid a further drop in shares.
Initial data from stock exchanges on Monday showed that Adani has now received 687,840 bids, or 1.5%, of the 45.5 million shares offered for sale. The deal closes on Tuesday.
According to the data, domestic and foreign institutional investors, as well as mutual funds, have so far not made any bids.
Hemang Jani, equity strategist at Motilal Oswal Financial Services, said: “Retailer participation is likely to fall short as the current market price remains below asking price and sentiment suffers. due to the Hindenburg controversy”.
“While there is a risk that the sale of shares will not go through, it is important to wait and see how engaged institutional investors are today.”
The Adani Group told Reuters in a statement on Saturday that the sale was on schedule with the planned issue price, even as sources said the bankers of the land’s largest secondary sale of shares. The country is considering extending the time after January 31 or adjusting prices due to the impact of the epidemic. decrease its stock price.
Indian regulations state that the share offering must receive a minimum of 90% of the subscription and if not, the issuer must refund the full amount. Maybank Securities and the Abu Dhabi Investment Authority were among the investors bidding for the anchor part of the matter.
Maybank said in a statement there was “no financial impact” because Adani’s subscription to the offer was funded entirely with customer funds.
The giant state-run insurer, Life Insurance Corporation (LIC), also invested, accounts for 5% of the roughly $734 million share of fixed assets. It already holds a 4.23% stake in flagship company Adani, while its other groups include a 9.14% stake in Adani Ports and a 5.96% stake in Adani Total Gas.
On Saturday, index provider MSCI said it is seeking feedback from market participants on Adani and is monitoring factors that “may affect the eligibility of these related securities.” that regard” in the MSCI indexes. There are at least six Adani Group companies in the MSCI India Index, with a cumulative weighting of 4.31%.
“Stocks are at risk of being dropped from MSCI. This may not happen immediately, but those funds that bought it based on MSCI … their investors will ask them not to continue holding their holdings. and that’s where this threat emerges,” said Deven Choksey, founder and chief executive officer of the KR Choksey Group.
Hindenburg’s report has led to a massive bankruptcy at seven Adani group listed companies since last week. As of Monday, the seven listed entities have lost a total of $66 billion in market capitalization since the report was published. Adani Total Gas lost the most, at $21 billion.
On Monday, responding to Adani’s rebuttal, Hindenburg said “the answer largely confirms our findings and ignores our key questions.”
In his response on Sunday, Adani highlighted his relationship with local and international banks, and showcased his access to diverse funding sources and structures, listing Chinese banks United States Citigroup and JPMorgan Chase & Co and European lenders such as BNP Paribas, Credit Suisse and Deutsche Bank.
But the stock market crash continues to be a significant setback for 60-year-old Adani. The dropout’s incredible ascent was accompanied by a gain of more than 1,500% in some of his corporation’s shares in three years, making him the world’s third-richest person before falling to No. eight on the Forbes list on Monday.
The Hindenburg report said five of Adani’s seven main listed companies reported current ratio, a measure of current assets minus current liabilities, below 1, which indicates “liquidation risk” short-term account increased.
It said Adani’s main listed companies had “substantial debt” leaving the entire group “with precarious financial foundations” and shares of Adani’s seven listed companies fell 85%. due to what it calls “sky-high valuations”.
Adani’s response on Sunday said that over the past decade, its group companies have “constantly reduced leverage”.
(Disclaimer: New Delhi Television is a subsidiary of AMG Media Networks Limited, a Company of the Adani Group.)
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