Roundup | How much has the Adani group lost since the Hindenburg report?
Adani Group’s market losses climbed to over $100 billion while stocks continued their nosedive with most hitting lower circuits on Thursday, February 2, a day after the billionaire Chairman of Adani Enterprises Ltd called off a $2.5 billion or ₹20,000 crore fully-subscribed share sale (FPO) in a late-night announcement.
The group’s stocks and Mr. Adani’s personal wealth have taken a plunge after U.S. short-seller Hindenburg Research published a damaging report on January 24 alleging the Ahemadabad-based conglomerate’s involvement in “brazen stock manipulation and accounting fraud” over the decades, also flagging its “substantial debt”.
Mr. Adani made a video statement on Twitter before markets opened on Thursday morning to reassure investors and explain the unprecedented scrapping of the follow-on public offer (FPO) the night before. The entrepreneur said that while the decision to scrap the FPO would have “surprised many”, the group’s board felt it “would not have been morally correct” to proceed with the share sale considering the “volatility of the market” seen on Wednesday.
How volatile have the Adani stocks been?
The Adani Group has been facing a crisis of confidence as the stocks of most of its companies have been on the nosedive since the release of the Hindenburg report despite the conglomerate rubbishing the short-seller’s claims, publishing a detailed 413-page rebuttal to the report, and the Chairman himself attempting to instil confidence among investors. Here’s a roundup of how Adani stocks have changed since the day of the report’s release:
January 25: In the aftermath of the concerns raised by Hindenburg on January 24, the shares of all 10 of Adani group’s listed companies, including its recently-acquired cement (ACC and Ambuja) and media units (NDTV), fell across the board on Wednesday, January 25, with losses ranging from 1.5% to 8%. The share price of the group’s flagship company Adani Enterprises closed at ₹3,389.85, down from ₹3,442.75 on the Bombay Stock Exchange on January 24.
January 27: As markets opened on Friday, January 27, after a day off on account of Republic Day, all Adani stocks extended their plunge by closing time. Adani Enterprises shares tanked 18.52% on BSE. Adani Ports plunged by 16%, Adani Power by 5%, Adani Green Energy by 19.99%, and Adani Total Gas was worst hit by a 20% plunge. This was also the day bidding began for the now-scrapped Adani Enterprises FPO. The firm had set a floor price of ₹3,112 ($38.22) a share and a cap of ₹3,276 for the share sale but on the opening day of the offer, the stock had slumped to as low as ₹2,721.65, well below the lower end of the price offering.
January 30: After the weekend closure of markets, Adani Enterprises saw sharp gains of upto 10 per cent before settling with modest gains of 4.8 per cent on Monday, January 30, while other Group stocks continued their slide.
Despite the recovery from the pre-weekend stock rout, Adani Enterprises ended at ₹2892.8 on NSE, while other Adani portfolio companies- Adani Power, Adani Green Energy, Adani Willmar, Adani Total Gas, and NDTV only saw sellers flocking their counters on Monday. The Group’s gas and clean energy arms both plunged by 20%, while Adani Transmission fell by 15 per. The above-mentioned remaining companies hit 5% lower circuit.
Also read: Explained | Adani Group stocks: What is Hindenburg Research, and how does a short seller operate?
January 31: The now-called-off $2.5 billion FPO by Adani Enterprises was fully subscribed by Tuesday, January 31, which helped it recover to close at ₹2,975 on the BSE, compared to Monday’s ₹2878.50, but it still remained below the floor share price offered by the FPO. On the NSE, Adani Enterprises gained 2.8 per cent to end at ₹2,973.90, while some others also made gains- Adani Transmission (3.85%), Adani Green Energy (2.94), ACC Cements(3.37%), and NDTV (1.87%). Meanwhile three other arms, Adani Power (down 4.99%), Adani Wilmar (down 5%), and Adani Total Gas (down 10%) remained under selling pressure.
February 1: While the Union Budget 2023-24 was presented during the day on Wednesday, 10 listed firms of the Adani Group witnessed a massive rout as stocks plunged from 3 to 28%, deepening the crisis triggered by the report. The combined market value of the group shares had plunged by more than 35% in just five trading sessions by Budget day.
Adani Enterprises shares nosedived 28.45% to close at ₹2,128.70 on the BSE, while Adani Ports plunged to 19.69%; Wednesday marked the worst day on record for both companies.
February 2: The scrapping of the huge share sale the night before failed to rescue stocks as the Adani Enterprises share price dropped another 26.5% to end at a low of ₹1,564.70 on the BSE. Except for Ambuja Cement, all other stocks of its listed entities witnessed rout, declining from 5-18% on Thursday.
What is the scale of losses the Adani Group has incurred?
On February 2, the Adani conglomerate’s market losses exceeded a whopping $100 billion since January 24. By Friday, January 27, listed companies of the Adani conglomerate, excluding cement and media arms had lost a combined $48 billion in market capitalisation. According to Bloomberg, the three-day selloff managed to eras about $72 billion in market value of the Group by January 30. Combined losses of all companies reached $92 billion by Budget day or February 1, with Adani Total Gas being the worst hit with $27 billion in losses. Adani Total Gas shares have also taken the biggest plunge of 56% since January 24.
The stock rout also forced some international lenders to take a cautious approach with Citigroup and Swiss lender Credit Suisse stopping the extension of margin loans to its clients against securities of embattled Adani Group firms.
Besides, Reuters reported that market regulator Securities and Exchange Board of India (SEBI) has started investigating any suspected violations in the scrapped- FPO and is reportedly also probing the allegations that Adani entities failed to declare related party transactions as required and used sprawling network of offshore entities based in tax havens, all claims denied by the conglomerate.
Mr. Adani’s personal wealth has also taken a significant hit as he slipped on Thursdat to the 16th spot in the ranking of the world’s richest person as per Forbes’ list, down from holding the third rank last week. The Billionaire also lost the title as Asia’s richest person to rival billionaire Mukesh Ambani, according to the Bloomberg Billionaires Index. By February 1, a whopping $44 billion had evaporated from his personal weath gains.
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