Adani business emerges on top a year after Hindenburg saga

The Indian billionaire Gautam Adani has shown improvement on several metrics related to company fundamentals, one year after a study by US-based short-seller- Hindenburg report Adaniaccusing the Adani Group of fraud and “brazen” manipulation of stock prices. The conglomerate disputes the charges and even came out clean in Supreme Court hearings.


His ports-to-power empire has resulted in reduced debt, gained new backers from the US to the Middle East, secured landmark projects, and led to more frequent communication with lenders and investors. More and more people and cargo containers are utilizing the same to transport goods by air. In addition to redeveloping the vast Dharavi slum, the Adani Group is constructing a new airport in Mumbai, India’s financial hub.


With such developments, many people are betting that the Adani enterprise will be big again soon. According to Chakri Lokapriya, Managing Director of RedStrawBerry LLP in Chennai, “both institutional and retail investors have found greater comfort” as a result of the Supreme Court’s decision to not involve a special investigation team(SIT) into the matter. According to Lokapriya, the year after the short-seller broadside has been a blessing for the Group. 


Ports, electricity lines, airports, data centers, solar parks, and cement mills are all part of the conglomerate’s vast infrastructure empire, which helps it to remain resilient. Investors are eager to capitalise on the Indian economy boom, and Adani Group is at the core of it. 


Freedom and Determination


The leaders of the Adani Group were left exposed to margin calls on their pledged shares as the price plummeted in response to Hindenburg report Adani, which caused a market value erosion of tens of billions of dollars. While significantly reducing their committed assets, Adani and his family paid $2.15 billion.


Most of the over $5 billion in investments came from GQG Partners LLC, an investment company run by Rajiv Jain. GQG went against the grain in March 2023 by purchasing shares in four Adani companies, and since then, it has continued to pour money into the Group.


From a record low of $82 billion in February last year, after the short-seller report, the aggregate market value of the ten Adani firms listed on the stock exchange has risen to around $175 billion, an increase of almost 112%. All losses seen following Hindenburg’s report had been eliminated by five of them.


A US-backed agency’s $553 million investment in the Group’s port operation in Sri Lanka and the Indian Supreme Court’s ruling rejecting requests for a federal inquiry or special investigation into Adani’s enterprises are the main factors driving the recent upsurge in the equities.


Nevertheless, Adani Group should continue to strengthen its analyst coverage. Almost all of its businesses are struggling, except the ports and the cement manufacturers that were recently bought. A larger public float would help the corporation avoid extreme stock price fluctuations.


Financial Markets


A presentation submitted to exchanges shows that the conglomerate’s net debt decreased by 3.5% to $21.72 billion in the six months ending in September. After reaching 3.3 in March, its net debt-to-EBITDA ratio dropped to 2.5 in September. During the pre-Hindenburg era of rapid growth (August 2022), this ratio was at 3.9 for the Group.


Thirteen of Adani Group’s fifteen-dollar bonds were over the standard threshold for distressed bonds (80 cents on the dollar) as of January 19th. Bloomberg data shows that after the news, most were trading at levels reached last year, if not higher.


In October, the firm was able to refinance $3.5 billion worth of debt, which shows that creditors were becoming more confident in them.


The Adani Group’s plans align with Modi’s goals for the country’s development. “The government stands behind the company and serves important functions in key areas of the economy,” said Sabrina Jacobs, client portfolio manager for fixed income at Pictet Asset Management in London.


Emerging Faith


New high-profile supporters have helped Adani Enterprises Ltd. grow its investor base, even if the $2.5 billion share sale that was shelved due to the Hindenburg report Adani was a significant setback.


In five years, GQG’s Jain hopes to be “one of the largest investors in Adani Group”, a testament to his extreme optimism. International Holding Co. of Abu Dhabi, TotalEnergies SE, and the Qatar Investment Authority have increased their investments in recent months.


There have been shifts inside the Adani family as well. Along with scores of other ultra-wealthy people seeking to shield their fortunes, the family is establishing a Special Purpose Vehicle in the international financial hub of Abu Dhabi.

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