Adani Group companies have erased about $135 billion of their total equity market value since the explosive Hindenburg Research report, but none has been hit as bad as Adani Total Gas Ltd.
(Bloomberg) — Adani Group companies have erased about $135 billion of their total equity market value since the explosive Hindenburg Research report, but none has been hit as bad as Adani Total Gas Ltd.
The stock has seen three quarters of its value wiped out since the short seller report was published on Jan. 24. Yet, it is the second-most richly valued among group entities — was the priciest before Hindenburg allegations — and has relatively less liquidity. Hindenburg had calculated that, on average, seven of the conglomerate’s stocks were overvalued by 85%.
Adani Total slumped by its daily limit for a 17th straight session on Monday. Indian exchanges tweaked the limit for the stock to 5% from 20% as the selloff worsened.
Adani Total Gas “is under fundamental as well as technical pressure, which has led to the downfall,” said Abhay Agarwal, a fund manager with Piper Serica Advisors Pvt. A fall in European gas prices is adding to company-specific woes and “will put pressure on the profitability,” he added.
The combined market value of Adani Group’s 10 companies is on the verge of falling below $100 billion as concerns about the conglomerate’s access to overseas financing remain. Investors are still worried about its debt and cashflow levels as billionaire Gautam Adani and his companies take steps from repaying loans to pledging to reduce leverage ratios. Meanwhile, the shock to India’s broader market from allegations of stock manipulation and accounting fraud leveled by Hindenburg against the group is starting to abate.
Seven of the 10 stocks were lower in Mumbai on Monday. Adani Green Energy Ltd. and Adani Transmission Ltd. also fell by their 5% limit.
Following the Hindenburg report, French energy giant TotalEnergies SE put a multi-billion dollar plan to produce green hydrogen with Adani Group on hold, in a setback to the gas unit. Another concern is Adani Total Gas’ debt levels.
The company faces combined maturing debt payments in the fourth quarter of its 2023 fiscal year and the 2024 fiscal year that amount to more than its cash balance, according to an exchange filing. It also has, however, cash flow from assets of 9.32 billion rupees ($112.7 million).
The stock’s float, or the amount available to trade in the public market, is about 19%, according to data compiled by Bloomberg. That’s the lowest among the group after Adani Wilmar Ltd. MSCI Inc. reduced what it considers the firm’s freely tradable shares in its latest quarterly index review but has since delayed the implementation.
–With assistance from Bhuma Shrivastava and Divya Patil.
(Updates price levels throughout.)
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