Mumbai: Adani Group is considering a share buyback of group firms and & SEZ worth up to ₹3,000 crore, said two people directly aware of the development. Talks are at an advanced stage and formal announcements by the company boards will be made in the coming weeks, they added.
Shares of Ambuja Cements and Adani Ports fell sharply last week along with other Adani Group stocks following US-based short-seller Hindenburg Research’s adverse report on the conglomerate.
“The management hopes that the buybacks, once announced, will bolster investor confidence in the group companies and address any misgiving about the group’s financial health,” said the first person cited above.
“As things stand, the announcement about the buyback is likely after the conclusion of the ongoing follow on public offer (FPO) of
(AEL) that opened last week,” said the person.
An emailed query in this regard sent to group spokespersons did not elicit a response until press time on Sunday.
The share price of Ambuja Cements plunged as much as 25% on Friday, its steepest intra-day fall since 2006. The stock closed 17% lower at ₹380.45. The Adani Ports stock declined 23% last week, and 16.3% on Friday alone, to close at ₹596.95, its lowest close since February 11, 2021.
Ambuja Cements’ balance sheet and return on equity is in the top tier with regard to the Indian cement space. Adani Group has ambitious plans to double the combined capacity of ACC and Ambuja Cements to 140 MTPA in the next five years. Ambuja Cements has reserves of 25,130 crore with a cash equivalent of 8,504 crore as on June 30, 2022.
Adani Ports, which has robust operating cash flows, plans to become an integrated transport utility providing end-to-end solutions with a targeted cargo handling of 500 MT by FY25. It has a cash equivalent of 5,835 crore as on September 30, 2022. Adani Ports’ net debt has increased from 31,700 crore in March 2022 to 35,800 crore in September 2022 given the outlay for capex and acquisitions.
Ambuja Cements shares hit a high of 598.15 on December 9. Since then, the stock has corrected 36%, whereas Adani Ports shares have declined 39% since hitting a high of 987.9 on September 20 last year. In September last year, the Adani Group made an open offer at 2,300 per share for ACC and 385 per share for Ambuja Cements following its deal in May to acquire a controlling stake in Holcim’s businesses in India.