Adani Group Stocks On The Road To Recovery After Hindenburg Battering

The Adani Group stocks are the grabbing all the headlines in the Indian share markets in the last few days. The group has surprised the nation, leaving them to think how one of the biggest wealth creators of the company has witnessed huge losses in the market.

The stocks of the Adani Group have seen great fluctuations since the last few days. Gautam Adani led Adani Group has been bearing the brunt of the US short seller Hindenburg Research's ‘expose’ on the group for the last 12 days. Adani had to withdraw the Follow on Public Offer (FPO) to boost confidence but nothing that the company has done so far has brought any good news. Losses are piling up taking the company stocks to depths of despair.

However, the conditions of shares of the group have recovered from an early 20 percent drop. On Wednesday, for the second day, Adani Enterprise witnessed a rise in its stocks as the group has now boosted confidence of the investors. The company reportedly went through a lot of to gain back the confidence of its investors in the market.

The shares of the Adani Enterprise traded higher for the second session with stocks of seven out of the ten companies logging in gains against the ground of its decision to pay up an amount of 1.11 million USD on loans of shares to the fore of their maturity in 2024.

It is to be mentioned that flagship Adani Enterprise was drawn to close nearly 20 percent higher at Rs 2,159 a share on the Bombay Stock Exchange (BSE), ahead of its December quarter earnings due later on February 9. Bloomberg analyst estimates indicate that the company may announce revenue of Rs 29,245 crore and a net profit of Rs 582.80 crore, with expected EBITDA at Rs 1,952 crore. The stock hit a low of Rs 1017.45 on February 3 and since then it jumped over 100 percent.

Meanwhile, other profit makers included Adani Ports and Special Economic Zone Ltd, which jumped 8.34 percent, Adani Transmission Ltd 5 percent, Adani Power advanced 5 percent, Adani Wilmar gained 5 percent and Ambuja Cement was up 0.2 percent. Meanwhile, Adani Green lost 1.4 percent, while Adani Total Gas Ltd fell 5 percent, ACC declined 1.1 percent.

The stocks were under constraint since January 24. The company lost more than Rs 9 trillion in market value. It then faced a bunch of allegations from the US short-seller Hindenburg Research. The report declared that the company utilised tax havens and raised concerns over its debts.

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At the same time, Fitch Ratings agency holds that there is an immediate impact on the ratings of Adani Group and their securities after the Hindenburg report. Fitch also said that there will be no material changes to its forecast cash flows.

Rating Agencies Crisil and ICRA Limited said that they are monitoring the impact of recent developments on its rated portfolio in the Adani Group.

CreditSights Inc recently said that the exposure to the Adani Group is not an issue for State Bank of India, given the strong provisioning buffer of the lender. SBI's exposure to Adani Group is 0.88 percent of total loans or Rs 27,000 crore as on December 31 and no loans against shares have been provided to the group.

The recent rise of the stocks has managed to raise the confidence among the investors towards the Adani Group. On February 7, Adani Ports and Special Economic Zone (APSEZ) announced plans to repay and prepay loans worth Rs 5,000 crore in 2023-24. This was stated by Karan Adani, CEO of the company, in a recent statement. As of December 2022, APSEZ had cash and cash equivalents amounting to Rs 6,257 crore.

On the other hand, the company's net profit for the December quarter showed a year-on-year decrease of 16 percent to Rs 1,315 crore. Revenue for the December quarter came in at Rs 4,786 crore, up 17.5 percent, on-year.

For the quarter that ended on December 31, 2022 Adani’s Green Energy integrated a net profit of 10 percent to Rs 103 crore from Rs 49 crore in the fiscal year 2021-2022.

Moreover, Adani Transmission reported a massive 78 percent year-on-year growth in consolidated profit at Rs 474.72 crore. It registered a 22 percent growth in revenue for the quarter at Rs 3,552 crore.

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