Adani Enterprises, the flagship entity of Adani Group is scheduled to report its third-quarter earnings for fiscal 2023 today, on Tuesday, February 14. The group made headlines after US-based short-seller Hindenburg Research accused the Adani Group/family of stock manipulation and money laundering. The company’s stocks fell 50% in the aftermath of Hindenburg’s report, losing over Rs 9 lakh crore in market capitalisation in just a few days. Yesterday, four Adani stocks, Adani Green Energy, Adani Power, Adani Transmission and Adani Total Gas were locked in the lower circuit. Adani Enterprises shares tanked 10%, hitting an intraday low of Rs 1662.25 on NSE.
Five reasons that could hurt/benefit Adani Enterprises share price:
Hindenburg Research Report impact
On January 24, Hindenburg Research published a report named “Adani Group: How The World’s 3rd Richest Man Is Pulling The Largest Con In Corporate History.” It accused Gautam Adani and his brothers of stock manipulation and running various shell companies abroad, taking a short position in Adani Group Companies through US-traded bonds and non-Indian-traded derivative instruments. The report further added that its 7 key listed companies have 85% downside purely on a fundamental basis owing to sky-high valuations. In just a few days Adani Group’s market capitalization fell over Rs 9 lakh crore. Recently, the Adani group hired a New York-based law firm ‘Watchtell’ to settle the battle.
Fully subscribed FPO called off
Earlier this month, Adani Enterprises called off its fully subscribed Rs 20,000 crore follow-on public. “Given the unprecedented situation and the current market volatility, the company aims to protect the interest of its investing community by returning the FPO proceeds and withdrawing the completed transaction,” the company said in a statement.
Growth target slashed
Adani Group slashed the revenue growth target to half and plans to hold off fresh capital expenditure, according to media reports. The group will now aim for revenue growth of 15% to 20% for at least the next financial year, down from the 40% growth originally targeted. Capital expenditure plans are also likely to be scaled down as the group prioritizes strengthening its financial health over aggressive expansion.
MSCI review
Morgan Stanley Capital International (MSCI) changed the foreign inclusion factor in Adani Transmission, Adani Total Gas and Adani Enterprises, which could lead to estimated outflows of $416 million in these companies, according to analysts. The MSCI passive trackers will implement changes on February 28. The affected securities will be further reviewed as part of the full country float review in May, which could lead to some index deletions and more passive selling, according to experts.
Moody’s ratings outlook cut
Moody’s Investor Service downgraded the ratings outlooks of four Adani group companies including Adani Green Energy Ltd to ‘negative’ from ‘stable’. “These rating actions follow the significant and rapid decline in the market equity values of the Adani Group companies following the recent release of a report from a short-seller highlighting governance concerns in the Group,” Moody’s said in a statement. Further, Moody’s kept outlook and ratings stable on four other Adani group companies, including Adani Ports and Special Economic Zone Ltd.
