(Bloomberg) – The stock drop in Gautam Adani’s indebted conglomerate entered its third week as the group’s flagship company suffered a setback in raising new funds and a credit rating agency. The major downgraded the outlook for two of their companies.
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All 10 shares of the group fell in early Mumbai trading on Monday. Flagship Adani Enterprises Ltd. down 9.7%. The crisis since US short-seller Hindenburg Research filed fraud allegations against it in a January 24 report has wiped out $118 billion, or more than half of its market value. of the companies of this group. Adani has repeatedly denied the claims.
The consequences of the relentless sell-off are widespread as concerns grow about the exposure of financial institutions and investors to the group. The chaos has disrupted parliament and India’s main opposition party is increasing pressure on Prime Minister Narendra Modi for his silence on the matter. It planned a nationwide rally on Monday to highlight the risk to small investors.
Meanwhile, concerns about the group’s ability to access capital are also growing. Adani Enterprises has halted a key bond sale, Bloomberg News reported on Saturday, less than a week after it abruptly canceled a record domestic share offering. S&P Global Ratings has downgraded its outlook for Adani Ports & Special Economic Zone Ltd. and Adani Electrical Mumbai Ltd. negative on Friday.
Catherine Yeung, chief investment officer at Fidelity International Ltd., told Bloomberg Television on Monday: “Adani has a lot of debt, so in terms of corporate governance, there are always question marks around them. “This really reiterates that, especially in emerging markets, how well you really have to get to know companies, really go into the details of their balance sheets.”
Chief Financial Officer Jugeshinder Singh told CNBC TV-18 news channel in an interview that aired on January 30, without elaborating on Adani Group’s total debt “only about $30 billion.”
Adani’s bondholders are holding initial conversations with financial advisors and attorneys to weigh their options, seeking guidance on how the corporation’s debt structure will be affected in the futures. various situations, including regulatory and legal remedial possibilities.
Nine of the group’s $15 bonds fell in price in the early hours of Monday afternoon in Hong Kong, prices compiled by Bloomberg showed.
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Indian authorities stepped in over the weekend to defuse tensions that have been strained over fears of mayhem, saying regulators have the authority to deal with the aftermath and disruptions. Banks exposed to this group are within limits.
Hindenburg Research accused the group of “brazen” market manipulation and accounting fraud, claiming that a website of overseas shell organizations controlled by the Adani family in tax havens had used to facilitate corruption, money laundering and theft of taxpayers’ money.
The group called the report “bogus” and threatened legal action. Adani gave a video speech last week saying the team’s balance sheet is healthy.
Depreciating stocks have cost India its place among the world’s five largest stock markets, while the rupee has been the worst performing emerging Asian currency this year. Foreigners withdrew $3.8 billion from the nation’s equities in 2023, the most of any emerging Asian market, excluding China.
A batch of team quarterly earnings will emerge in the coming days, led by the scheduled release of Adani Transmission Ltd. at the end of Monday, giving investors more opportunity to scrutinize the financial situation.
“This week’s focus is on the earnings reports of the Adani Group companies – and their comments on debt sustainability,” said Charu Chanana, strategist at Saxo Capital Markets. “The Adani Group still needs to respond coherently to allegations of fraud and emphasize its sound financial position to restore investor confidence.”
–With support from Abhishek Vishnoi.
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