SINGAPORE - Most Adani Group stocks rose, extending their rebound from the rout sparked by US short-seller Hindenburg Research’s report, as the indebted Indian conglomerate takes steps to address investor concerns over leverage.
Seven of the group’s 10 stocks were up in Wednesday’s session, with flagship Adani Enterprises rallying 20 per cent after surging the most since 2020 the previous day. The stock has more than doubled from the low it hit during the recent sell-off.
The sell-off that at one point erased US$117 billion (S$155 billion) from the value of billionaire Gautam Adani’s companies has eased as the tycoon and his family prepaid some borrowings and the ports unit pledged to improve its debt ratio. Focus will turn to earnings from Adani Power and Adani Wilmar due on Wednesday after five other group companies released results earlier this week.
“Deleveraging is expected to be the group’s immediate focus for at least the next year or so,” said fund manager Abhay Agarwal with Piper Serica Advisors. “Recent earnings commentary also supports this view. They may go slower on inorganic growth because big acquisitions will require fresh borrowing and lenders may not offer the same comfort as in the past.”
Net income at Ambuja Cements beat estimates while that of Adani Ports missed forecasts. Adani Transmission posted a 78 per cent gain in third-quarter profit.
Adani Ports & Special Economic Zone climbed as much as 9.4 per cent on Wednesday. Shares of Adani Wilmar, Adani Power and Adani Transmission rallied about 5 per cent each on Wednesday.
“It is a mix of short covering and fresh buying,” said Mr Deven Choksey, managing director at KRChoksey Holdings. “Technically speaking, cash margins put in have arrested the free fall. Short selling has stopped.”
Dollar bonds issued by Adani Group companies also rallied on Wednesday, according to Bloomberg-compiled data. Adani Green Energy’s note maturing in September 2024 led the increase, up 3.2 US cents to 76.9 US cents as at 11.39am in Mumbai. The July 2024 Adani Ports bond climbed 0.7 US cents to 90.1 US cents.
The recent slump in Adani Group assets has attracted buyers, with the likes of Oaktree Capital Management and Davidson Kempner Capital Management picking up debt related to the conglomerate in recent weeks, according to people familiar with the matter.
In the report issued last month, Hindenburg Research said the group had inflated revenue and stock price - accusations the conglomerate has repeatedly denied.
Indian protests
Parliament has been adjourned for three days and was briefly suspended on Tuesday as the opposition draws attention to what they describe as Mr Adani and Mr Modi’s close links.
The crisis comes as Mr Modi is set to seek a third term in office in national elections due in 2023. Allegations of corruption or damage to small investors because of the exposure of some state-run institutions to the Adani empire could dent his vote base.
The opposition has so far not been able to gain much traction for their protests outside of Parliament.
After a brief adjournment on Tuesday, opposition lawmakers used a debate over the President’s address made at the start of this budget session of Parliament last week to bring up the Adani issue.
Mr Rahul Gandhi, a leader of the main opposition Indian National Congress party, used his time in Parliament on Tuesday to draw attention to Mr Adani’s meteoric rise.
“All over the country, a word I kept hearing was ‘Adani, Adani, Adani,’” Mr Gandhi said in reference to his recently concluded five-month long “unity march” across India. “Everywhere, people asked me how come Adani is successful in every business venture, how come he has never failed? And, the most important question: What is his relationship with the country’s Prime Minister?”
Mr Sougata Ray, a lawmaker for the opposition Trinamool Congress party, said: “The house will function. We will ensure that there is a debate on the issue… Adjourning the house will not work as a strategy.” BLOOMBERG
