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Adani Group shares fall again amid Moody's downgrade, report of lowering growth target

Adani Enterprises declines 7%; Adani Ports and SEZ tumbles 5.25%

People commute past the Adani Electricity corporate office building in Mumbai | Reuters People commute past the Adani Electricity corporate office building in Mumbai | Reuters

It's been more than three weeks since US-based short seller Hindenburg Research published a scathing report on the Adani Group, accusing the coal mining to airports conglomerate of stock manipulation and accounting fraud. But, there seems to be no respite for Adani Group’s stocks, many of which continue to touch new lows. 

On Monday, shares of group flagship Adani Enterprises declined 7 per cent to close the session at Rs 1,717.55 on the BSE and Adani Ports and Special Economic Zone tumbled 5.25 per cent to close at Rs 553.20. Among other group companies, Adani Green Energy, Adani Wilmar, Adani Total Gas, Adani Power and Adani Transmission, all traded at their respective 5 per cent lower circuit limit. NDTV shares also declined 5 per cent and cement companies ACC and Ambuja were down 3 per cent and 5 per cent respectively. 

The latest round of sell-off in Adani Group stocks comes on the back of Moody’s Investors Service downgrading its outlook on four Adani Group companies, including Adani Green, to negative from stable. Separately, in the wake of the share price crash and the withdrawal of the Rs 20,000 Adani Enterprises follow-on share sale, the Adani Group has cut its revenue growth expectations and may put some capital expenditure on hold, according to a Bloomberg report, which also weighed on investor sentiments.

According to the news report, the group will now aim for around 15-20 per cent revenue growth in the next financial year, compared with the 40 per cent growth it had earlier targeted. It will also scale back some capex as it looks to conserve cash and repay debts, the report said. 

The group has looked to prepay debt in efforts to free up some of the pledged shares; last week it said it had paid $1.1 in debt ahead of their September 2024 maturity. This move would also assuage investors that the group has enough cash. 

But, experts also point to the fact that continued share price fall would lead to more debt collateral margin calls getting triggered, something the group may want to avoid. 

“Sustained selling could trigger debt collateral margin calls on the promoter pledge shares, and this could mean further selling of shares,” Shriram Subramanian, founder and managing director of the proxy advisory firm InGovern, told THE WEEK. 

With the shares falling and the overhang of the Hindenburg allegations, the group is also unlikely to look at raising fresh funds from the market any time soon. 

“The withdrawal of the Rs 20,000 crore FPO means that some projects would likely have to be slowed and put in cold storage,” he said further.

According to recent exchange filings, three Adani Group companies – Adani Ports, Adani Transmission and Adani Green – pledged additional shares to SBICAP Trustee Company. 

A few days ago, French energy giant TotalEnergies, which has investments in the city gas distribution business Adani Total Gas, had said that Adani Group plans to mandate one of the ‘big six’ accounting firms to carry out a “general audit.”

An independent verification of things would assuage the feeling and restore their reputation, JN Gupta, former executive director of Securities and Exchange Board of India and the founder of Stakeholder Empowerment Services, told THE WEEK in a recent interaction.

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