Gautam Adani’s statement fails to calm investors, shares of group companies tank
The Adani Group faced another disastrous day on the stock market as shares of its listed companies continued their downward spiral, despite a statement by the conglomerate’s billionaire owner Gautam Adani to calm investors.
His statement came a day after the conglomerate announced that it had shelved the Rs 20,000 crore share sale amid increased market volatility. However, shares of Adani Group companies continued to plummet, with most hitting their lower circuit.
Adani Group stocks face bloodbath
Shares of the conglomerate’s flagship company, Adani Enterprises, were down over 9 per cent, while Adani Ports and SEZ fell over 3 per cent.
Meanwhile, shares of all other listed Adani Group companies, including Adani Wilmar, Adani Total Gas, Adani Power, Adani Transmission and Adani Green Energy, hit their respective lower circuits. NDTV also hit its lower circuit of 5 per cent in early trade.
Only Ambuja Cement (up nearly 7 percent) and ACC (up 1 per cent), the two cement companies owned by Adani Group, traded in positive territory.
Dramatic setback for Adani Group
The withdrawal of the Adani Enterprises FPO marks a dramatic setback for the conglomerate, as the share sale was fully subscribed with strong contributions from HNIs and anchor investors.
Adani Group’s disastrous run on the stock market started last week after US short seller Hindenburg Research released a scathing report, accusing the conglomerate of stock manipulation and improper use of tax havens. It also raised concerns about the group’s mounting debt.
While Adani Group dismissed the report in multiple statements, it has severely hurt valuations of listed companies. It has also hurt Gautam Adani’s net worth as he lost his title as Asia’s richest man.
After the FPO was called off, Adani Group released a statement saying its board had decided not to go ahead with the share sale as it would be “morally incorrect”.
Adani Group faces increased scrutiny
Adani Group’s recent stock market run has led to panic among investors and the market regulator is reportedly examining the recent crash in stocks of listed companies.
A Reuters report, quoting sources, highlighted that the Securities and Exchange Board of India (Sebi) is looking into several of the allegations made by Hindenburg Research, besides any potential irregularities in the Adani Enterprises FPO.
Meanwhile, the Reserve Bank of India (RBI) has also asked Indian banks to provide details of their exposure to Adani Group companies. Brokerage CLSA estimates that Indian banks were exposed to about 40 per cent of the Rs 2 lakh crore of Adani’s Group’s debt in the fiscal year to March 2022.
In another setback, another Reuters report indicated Citigroup’s wealth unit has stopped extending margin loans to its clients against securities of Adani Group.
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