Adani Group stocks ended on a mixed note. Except for Adani Enterprises and cement arms share price, all other listed stocks of the group closed in the red. Adani witnessed a loss of over ₹1.53 lakh crore in market cap on Monday. The performance comes after when the Gautam Adani-backed group released over 400-page response to Hindenburg’s allegations, while the US-based firm has also hit back. Adani’s ₹20,000 crore follow-on public offer (FPO) gained momentum with retail investors showing healthy demand. The FPO which is offered at a premium price band of ₹3,112 and ₹3,276 per FPO equity share, will close on January 31st.
Adani crisis unlikely to have any impact on Bengal’s Tajpur port project
Business chambers in Kolkata said the Adani Group crisis is unlikely to affect the proposed ₹15,000 crore deep sea Tajpur port construction, a major infrastructural project of West Bengal. State Chief Minister Mamata Banerjee handed over the letter of intent of the project to Adani Ports in October last year.
LIC says it has exposure of ₹36,474.78 cr to Adani group
LIC on Monday said it has an exposure of ₹36,474.78 crore to Adani group’s debt and equity, and the amount is less than one per cent of the national insurer’s total investments. LIC’s total assets under management stood at over ₹41.66 lakh crore as of September 2022.
Adani rout hits $68 bn as fight with Hindenburg intensifies
Gautam Adani’s 413-page attempt to restore confidence in his business empire is falling flat with investors, as stock-market losses deepen and key dollar bonds sink to fresh lows.
Dalal Street veteran Shankar Sharma on Adani Group stocks
Adani’s issue likely to be discussed in Parliament
According to a PTI report, opposition parties on Monday raised the Adani issue and the conduct of governors in some states ruled by them at an all-party meeting on the eve of Parliament’s Budget Session as the government asserted it was willing to discuss every matter allowed by rules and sought their cooperation in the Parliament during this budget session.
LIC’s exposure in Adani Group’s equity and debt
The majority of Adani Group’s stocks are in a bloodbath and Monday was no different after Hindenburg hit back at the conglomerate’s response to their allegations. Amidst this panic selling, investors have lost hefty in Adani stocks. The largest life insurer in India, LIC also has exposure in the Adani Group.
LIC said it has an exposure of ₹36,474.78 crore to Adani group’s debt and equity, and the amount is less than 1% of the national insurer’s total investments, as per the PTI report.
LIC likely to not participate in Adani’s FPO
India’s largest life insurer, LIC, one of the major shareholders in a couple of Adani’s companies, is likely to not participate in the ongoing $2.5 billion FPO.
Sources have told Reuters that LIC will not go (bid) for institutional quota at present. It added that LIC is taking a cautious approach and the board had only approved the anchor bid.
Both LIC nor the country’s finance ministry have not responded to Reuters queries immediately.
However, LIC has already announced that they are reviewing Adani’s response to Hindenburg’s allegations which brought the conglomerate’s listed stocks under pressure. Also, LIC is looking to meet Adani’s management within days.
Abu Dhabi’s IHC sees strong potential for growth in Adani Enterprises
While announcing its plan to infuse approximately $400 million in Adani’s ₹20,000 crore FPO, Syed Basar Shueb, Chief Executive Officer, IHC said, “Our interest in Adani Group is driven by our confidence and belief in the fundamentals of Adani Enterprises.”
IHC CEO added, “we see a strong potential for growth from a long-term perspective and added value to our shareholders.”
Shueb explained that the advantage of the FPO is the historical reference for the company’s earnings report, company’s management, business practices, and much data to bank on before making any investment decision.
FPO subscribed by 3% on the second day
Adani’s ₹20,000 crore FPO received a little over 3% subscription on the second day of the issue. As per BSE data, the FPO received cumulative bids of 13,98,516 equity shares against the offered size of over 4.55 crore equity shares.
Of the total, retail investors continue to be top bidders with the category subscribing to the FPO by 4% with bids of 9,76,944 equity shares against the reserved portion of 2,29,08,464 equity shares.
Non-institutional investors portion received bids of 3,95,832 equity shares on Day 2 against the reserved size of 96,16,323 equity shares.
The demand from both retail and non-institutional investors picked up marginally on Monday.
However, qualified institutional buyers (QIBs) continued to show dull responses to the FPO — with the portion recording bids of merely 4,576 equity shares against the reserved size of 1,28,21,336 equity shares for this category.
IHC to invest 1.4 billion AED in Adani Enterprises FPO
International Holding Company, the diversified Abu Dhabi-based conglomerate, on Monday announced its plan to invest AED 1.4 billion ($ 400 million) into the Adani Enterprises further-public offering (FPO) through its subsidiary Green Transmission Investment Holding RSC.
LIC reviews Adani’s response to Hindenburg’s allegations
LIC on Monday revealed that they are reviewing Adani Group’s over 400-page response to allegations raised by Hindenburg Research. Also, LIC plans to hold talks with the conglomerate’s management within days. The government-backed life insurer has pumped in 364.7 billion rupees ($4.47 billion) in Adani companies — which accounts for 1% of its assets under management.
Read here: LIC reviews Adani’s response to Hindenburg, plans to meet group’s management
Adani’s mix effect on stock market
Vinod Nair, Head of Research at Geojit Financial Services:
The response by Adani had a mixed effect on the stock group and market. The saga is likely to continue as a hanging risk in the minds of the investors in the medium-term. To expect a scientific assessment report either by a strong independent third party or government is dim in the short-term. Now the focus of the market will be on budget and fed policy.
M-cap of Adani stocks post closing on Monday.
After the closing hours, Adani Group’s stocks recorded a ₹1,53,502.39 crore erosion in market cap on Monday. Adani Enterprises m-cap rises.
Adani Total Gas: This would be the most valued firm in Adani’s ambit in terms of market share. Its market cap stood at ₹2,58,196.91 crore by Monday-end, compared to ₹3,22,744.77 crore on January 27th — recording an erosion of ₹64,547.86 crore.
Adani Enterprises: M-cap rose by ₹13,263.91 crore to ₹3,28,149.32 crore on Monday, compared to ₹3,14,885.41 crore on January 27th.
Adani Green Energy: M-cap down by ₹47,014.08 crore — taking the tally to ₹1,88,135.54 crore on Monday versus ₹2,35,149.62 crore on January 27th.
Adani Transmission: M-cap slip by ₹33,420.16 crore — taking the total to ₹1,90,760.4 crore on Monday — compared to ₹2,24,180.56 crore of last week’s Friday.
Adani Ports: This company faced the lowest erosion in m-cap by ₹378.03 crore to ₹1,28,927.89 crore compared to ₹1,29,305.92 crore on January 27th.
Adani Power: M-cap dipped by ₹4,782.6 crore to ₹90,888.77 crore by end of Monday’s session, from ₹95,671.37 crore of last week’s Friday.
Adani Wilmar: M-cap plunged by ₹3,359.66 crore on Monday to ₹63,872.71 crore from ₹67,232.37 crore of last week’s Friday.
After volatile session, Ambuja, ACC stock end higher
Adani’s cement companies, Ambuja Cements closed higher by 2% at ₹387.45 apiece. Notably, Ambuja stock gained nearly 12% in the early deals with an intraday high of ₹426.30 apiece before entering the volatile tone. This led to a seesaw performance in Ambuja with the stock also tumbling by nearly 8% with an intraday low of ₹351.70 apiece.
Adani has clarified that no Ambuja Cement shares have been pledged due to SEBI’s strict rules stake is considered encumbered.
A similar pattern was seen in ACC shares. This stock ended at ₹1,904.70 apiece up by 1.10%on BSE. However, in early deals, the stock had gained by nearly 10% with an intraday high of ₹2,072.45 apiece, but later in the day, it tumbled as much as 4.5% with an intraday low of ₹1,800 apiece.
In September last year, Adani became the second largest cement player in the country by acquiring Ambuja and ACC from Holcim for 6.4 billion dollars.
Except Adani Enterprises, all other Adani Group stocks end lower
After a volatile session, Adani Enterprises’ share price ended higher by 4%. Earlier in the day, the stock had touched 10% upper circuit. The ₹20,000 crore FPO picked up momentum, however, at a slower pace.
Adani Ports erased its 10% upper circuit gains and closed marginally lower at ₹596.85 apiece on BSE.
Adani Power and Adani Wilmar close at 5% lower circuit.
Adani Transmission ended 15% lower after touching a new 52-week low of ₹1607.80 apiece.
Adani Green and Adani Total ended at 20% lower circuit.
LIC to hold talks with Adani management in Hindenburg matter
The largest life insurer in India, LIC told Reuters on Monday it was reviewing the Adani group’s response to Hindenburg’s report and would hold talks with the management within days.
Managing Director Raj Kumar said, “Since we are a large investor we have the right to ask relevant questions.”
Adani bonds stumble
After Hindenburg’s counter report over Adani’s 418-page response, the Group’s bonds also took a massive hit.
All of the Adani bonds are currently trading with a cut of 1% to 5%.
Hindenburg also holds short positions in Adani Group Companies through U.S.-traded bonds and non-Indian-traded derivatives, along with other non-Indian-traded reference securities.
7 Adani stocks see erosion of over ₹1.75 lakh cr m-cap
Due to a frenzied selloff, Adani Group’s seven listed stocks witnessed an erosion of over ₹1,75,522 crore in market valuation on Monday.
Adani Total Gas and Adani Green shares are locked at a 20% lower circuit and saw their market cap drop by ₹64,547.86 crore and ₹47,029.92 crore compared to the previous session. Adani Enterprises who has launched the FPO erased early gains and was trading lower by 2%, with m-cap diving by ₹5,796.91 crore.
Meanwhile, Adani Transmission not only touched a 20% lower circuit but also a new 52-week low. The company’s m-cap slipped by ₹44,831.65 crore from the previous session.
Adani Wilmar and Adani Power’s market cap has declined by ₹3,359.66 crore and ₹4,782.6 crore from the previous day. These two stocks have touched a 5% lower circuit for the third day in a row.
Adani Port shares are also down, and its market cap has dropped by ₹5,173.54 crore.
Some Adani stocks hit 1-year low
Adani Green Energy, Adani Transmission among 174 BSE stocks to touch 52-week lows, 74 stocks hit 52-week highs.
FPO to fully subscribe by today?
Basant Maheshwari of The Equity Desk said, “For the moment, the current situation of Adani Group and the overall market to quite an extent has improved.” He added,” I believe the problem has been solved, and for the moment, everything is good..all is well.”
Maheshwari believes now the focus should be on the FPO and to see when the issue gets subscribed. He said, “I believe, today only, the FPO will be fully subscribed.” He added, “The current price levels indicate that FPO will probably be fully subscribed….”
LIC shares continue to dip
LIC shares continue to trade in red for the third consecutive day amidst a sharp selloff in Adani stocks.
Currently, the insurer’s stock is trading at ₹653.75 apiece down by 1.8% on BSE. In early trade, LIC shares dip nearly 4% with an intraday low of ₹639.70 apiece.
LIC has likely witnessed massive losses in its position in Adani after Hindenburg’s allegations pushed investors to carry panic selling since January 24 in the group’s listed stocks.
By end of the December 31, 2022 quarter, LIC holds 4.23% of Adani Enterprises, 9.14% of Adani Ports, 3.65% of Adani Transmission, 1.28% of Adani Green Energy, and 5.96% of Adani Total Gas.
Bank Nifty under pressure
Amidst the chaos in Adani stocks, Bank Nifty erased its psychological mark of 40,000 in early deals. Private banks take the most beating.
At the time of writing, Bank Nifty was trading at 40,154.65 lower by 190.65 points or 0.47%. In early trade, the index had touched an intraday low of 39,658.85, while it opened at 39,856.15.
IndusInd Bank stock was the top bear, dipping by over 2.5%. ICICI Bank, SBI, and HDFC Bank followed with nearly a percent drop each. Stocks like PNB, Bandhan Bank, IDFC First Bank, and AU Small Finance Bank were top gainers.
Banking stocks have come under pressure after panic arose about their exposure to Adani Group’s debt levels.
According to a CLSA report, even though Adani Group’s debt levels doubled from ₹1 lakh crore to ₹2 lakh crore in the past three years, the overall bank debt increased by more than 25 percent. The Indian banks’ exposure to debt is less than 40% and that of private banks is less than 10%.
Gautam Adani has no idea of funds flowing from Vinod Adani to group?
Hindenburg found Adani’s on response on Vinod Adani’s involvement with the Group, as “lack of direct and transparent answers to these questions telling.”
The US firm cited Adani’s response of “We are neither aware nor required to be aware of their ‘source of funds’”. It also added that it is “not in a position to comment on…allegations on the business dealings and transactions of Vinod Adani.”
Following this, Hindenburg said, “we are expected to believe that Gautam Adani has no idea why his brother Vinod lent massive sums of money to Adani entities, and no idea where the money originated from.”
“If any of that were true, Gautam could easily clear up the mystery by calling his brother, or asking him at the next family dinner, why he has been directing billions of dollars to Adani-controlled entities through a network of opaque offshore shell entities. He could also call the head of his own Family Investment Office and ask the same.”
Read here: Hindenburg’s allegations against Gautam Adani’s brother Vinod Adani. 8 points
Markets weekly outlook
Manish Chowdhury, Head of research at Stoxbox:
We feel that though markets can see some respite after two days of sell-off, there is some pain left in the markets before it stabilizes. We feel that investors should adopt a wait and watch approach atleast for the next week when there are two major events lined-up viz-a-vis Union budget and the US Federal Reserve interest rate decision. Though the budget is mostly expected to be pro-growth, the US Fed looks in a conundrum over the size of the rate hike. With lots of noise around Adani Group shares over the last two days, it is advisable for investors to stay away from them till clarity emerges on the various controversial remarks from the US-based Hindenburg Research.
What to expect in Adani stocks?
Nirav Karkera, Research Head at Fisdom:
Adani group stocks have been challenging investor sentiments through a variety of concerns. Right from a burgeoning debt structure to rich or grotesquely expensive valuations depending on the entity and valuation methodology employed, these concerns have pushed investors to the edge of their seats. However, the recent report seems to be the straw that broke the camel’s back.
With the ongoing FPO priced at a premium to AEL’s post-correction share prices and the group’s stance to continue with the FPO schedule and pricing exudes confidence, but a reflection of the same in investor sentiment is questionable.
The initial and sharp decline appears to be majorly led by individual investors, some domestic institutions, and trading entities. The bulk of ownership across most entities belonging to the group is retained by select domestic and foreign institutions and other promoter group entities.
With such a steep drawdown already taken effect and the slim probability of institutional entities selling at this point, prices could move largely within the range unless further developments trigger otherwise.
Going ahead, we expect the stock prices to remain range-bound with limited downside and potential to surprise strongly on the upside.
Markets extend losses as selling heightens in Adani stocks
Although markets opened on a lower note, they picked up momentum after Adani Enterprises and Adani Ports’ share price touched the 10% upper circuit in the early deals.
However, markets have now extended losses as frenzied selling intensified in Adani Group’s stocks.
Adani Ports have erased its gain and is trading lower by 1%. Adani Transmission and Adani Total Gas are locked at 20% lower circuits. Adani Wilmar and Adani Port shares are frozen at a 5% lower circuit. Adani Green is down by nearly 19%.
While Adani Enterprises too have pulled back from its 10% upper circuit and is currently up by a little over 3%.
Sensex is trading at 59,213.37 down by 117.53 points or 0.20%. Nifty 50 traded at 17,568.25 lower by 36.10 points by 0.21%.
Retail investors are top bidders in FPO
In the early deals on Monday, Adani’s FPO received bidding of about 5,83,820 equity shares, at around 11.09 am, as per BSE data. This is compared to the offered size of over 4.55 crore equity shares.
Overall, the bidding in the FPO is at a slower pace.
Of the total bids received so far, retail investors lead the FPO with more than 5 lakh bids in the issue so far. As per the data, the retail investors’ portion received 5,00,908 bids against the reserved size of 2,29,08,464 equity shares. On the other hand, the portion for non-institutional investors received bids of 68,452 equity shares against the reserved size of 96,16,323 equity shares. The demand from qualified institutional investors has continued to stay dull.
Adani Group’s CFO Jugeshinder Singh
In a media interaction, Adani Group’s CFO Jugeshinder Singh said, the Group has given the responses to market regulator Sebi. Once they get any information, they will accordingly disclose it on exchanges.
He also stated that whether Sebi or Attorney General wants to take action in the matter, depends on both of them.
Adding he stated that the Group’s objective has been done, and we have given point by answers to every question along with documents.
It took Hindenburg 2 years, we took two-three days to answer those questions, Singh said.
No change in FPO priceband, timeline
Adani group has clarified that there will be no change in the FPO priceband and timeline. For the company FPO demand was never a concern and expect a full subscription
Out of the total $30 billion debt only or 23% or $9billion is from Indian banks, making it ₹72,000cr
No Ambuja Cement shares have been pledged due to SEBI’s strict rules stake is considered encumbered
Moses Harding John, President & CEO of IndusInd International Holdings response on the matter
John tweeted, “post-Adani’s response (to Hindenburg) establishing the group as systemic important player in growth & prosperity of Indian economy (notwithstanding issues around valuation & debt and lack of great confidence on governance), let good sense prevail in overall equity markets!”
Adani Group’s response on allegations on Vinod Adani
In its 418 page response, Adani gave a common response saying, “Vinod Adani does not hold any managerial position in any Adani listed entities or their subsidiaries and has no role in their day to day affairs. As such, these questions have no relevance to the entities in the Adani portfolio and we are not in a position to comment on your allegations on the business dealings and transactions of Vinod Adani.”
It added, “We reiterate that any transactions by the Adani portfolio companies with any related party have been duly identified and disclosed as related party transactions in compliance with Indian laws and standard and have been carried out on arm’s length terms.”
Did Vinod Adani lent massive sum of money to Adani Group?
Among a series of allegations, Hindenburg specifically brought attention to funds that flowed from Vinod Adani’s associated offshore shell entities through the Adani Group.
Hindenburg gives two examples. Firstly, a 253 million loan from a Mauritius entity where Vinod Adani serves as a director. Secondly, an investment of $692.5 million from a Mauritius entity controlled by the head of the Adani Group’s Private Family Investment Office.
In total, Hindenburg found 38 Mauritius-based entities associated with Vinod Adani and Subir Mittra (the head of the Adani private family office). Also, they found out that Vinod Adani’s associated entities are in other tax haven jurisdictions like Cyprus, the UAE, Singapore, and various Caribbean islands.
Hindenburg’s latest reply is that, “this information is critical to the integrity of Adani’s business, as it indicates whether the company is round-tripping turnover, laundering illicit funds, or using cash to manipulate its stock.”
Adani defense: Vinod Adani is not related party to the Group
To its allegations on billionaire Gautam Adani’s brother Vinod Adani, Hindenburg said, “Adani bizarrely argued that Vinod Adani is not a related party to the Adani Group and that there are no disclosable conflicts relating to the transactions that have collectively moved billions of U.S. dollars through Adani Group entities, largely through offshore shell entities.”
Allegations on Gautam Adani’s brother Vinod Adani
Hindenburg alleged that Adani Group has engaged in billions of dollars in suspicious dealings with its Chairman’s brother, Vinod Adani, and his labyrinth of offshore shell entities.
These entities included 38 entities in Mauritius, along with others in the UAE, Cyprus, Singapore, and various Caribbean islands.
Hence, these dealings raised serious questions about stock and accounting manipulation.
Adani stocks to dominate markets
Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services said, “Today the market will be completely dominated by the movements in Adani stocks. The statement from Adani Enterprises that the FPO is on schedule and that there is no change in the price band is hugely important. This can be interpreted as a reflection of the confidence of the management in the success of the FPO. It is important to understand that the stock has limited public float. So, the price crash on Friday happened mainly due to shorting Adani stocks in general and Adani Enterprises in particular.”
Vijayakumar added, “One possibility is a big short-squeeze in the stock. Huge volatility is in store in Adani stocks today. The sustained selling by FPIs in January with a massive sell figure of ₹5978 crores last Friday is a bit intriguing. Did the FPIs get wind of the storm blowing now? It is important to note that during the last 3 days while Nifty declined by 3.2 %, Bank Nifty declined by 6.3% on concerns of the Adani crisis impacting the banks. The correction in high quality private sector banks is a buying opportunity. Investors may wait for the dust to settle.”
Adani failed to answer 62 of Hindenburg’s 88 questions
Hindenburg says, “Our report asked 88 specific questions of the Adani Group. In its response, Adani failed to specifically answer 62 of them. Instead, it mainly grouped questions together in categories and provided generalized deflections.”
“Of the few questions it did answer, its responses largely confirmed our findings, as we detail,” the firm said.
Read here: ‘Myths of short seller’: Adani gives point by point reply to Hindenberg’s allegations
Hindenburg: Fraud is Fraud
According to Hindenburg’s latest reply, Adani Group predictably tried to lead the focus away from substantive issues and instead stoked a nationalist narrative, claiming that their report amounted to a “calculated attack on India.” In short, the Adani Group has attempted to conflate its meteoric rise and the wealth of its Chairman, Gautam Adani, with the success of India itself.
“We disagree. To be clear, we believe India is a vibrant democracy and an emerging superpower with an exciting future. We also believe India’s future is being held back by the Adani Group, which has draped itself in the Indian flag while systematically looting the nation,” the US-based firm said.
Hindenburg added, “We also believe that fraud is fraud, even when it’s perpetrated by one of the wealthiest individuals in the world.”
Hindenburg’s response to Adani’s 413-page statement
Hindenburg has replied to Adani Group’s 413-page statement on Sunday.
The US-based company released another report titled: “Fraud cannot be obfuscated by nationalism or a bloated response that ignores every key allegation we raised.”
“Adani also claimed we have committed a “flagrant breach of applicable securities and foreign exchange laws.” Despite Adani’s failure to identify any such laws, this is another serious accusation that we categorically deny,” Hindenburg’s note said.
Hindenburg pointed out that Adani’s ‘413 page’ response only included about 30 pages focused on issues related to their report.
The remainder of the response of Adani, Hindenburg said, “consisted of 330 pages of court records, along with 53 pages of high-level financials, general information, and details on irrelevant corporate initiatives, such as how it encourages female entrepreneurship and the production of safe vegetables.”
Adani Total Gas worst hit
Adani Total Gas share price is the worst hit on Monday, nosediving to its 20% lower circuit before correcting.
Adani Green Energy has tumbled by nearly 19%, while Adani Transmission has shed nearly 18% so far in the early deals on BSE.
Adani Power, Adani Wilmar hit another 5% lower circuit
Adani Power and Adani Wilmar hit 5% lower circuit for the third consecutive day on Monday.
At present, Adani Power is trading at ₹235.65 apiece and Adani Wilmar at ₹491.45 apiece on BSE.
Adani Ent, Adani Ports zoom
On Monday, Adani Enterprises and Adani Ports recovered some previous losses. Both the stocks are trading near the intraday highs.
At the time of writing, both Adani Enterprises and Adani Ports stock have hit 10% upper circuit at ₹3,038.35 apiece and ₹658.45 apiece on BSE.
The Accusation:
Hindenburg’s research report dated January 24, said, “we reveal the findings of our 2-year investigation, presenting evidence that the ₹17.8 trillion ($218 billion) Indian conglomerate Adani Group has engaged in a brazen stock manipulation and accounting fraud scheme over the course of decades.”
However, Adani’s top management had denied Hindenburg’s accusations, calling the research report of the latter a “maliciously mischievous, unresearched report”. The management has also called Hindenburg’s report with the principal objective of damaging Adani’s ₹20,000 crore FPO, which is one of the biggest follow-on public offers in India. Also, Adani has given detailed clarity over the accusations by Hindenburg.
Why Adani’s FPO saw dull demand in start?
The lackluster demand came after a US-based firm Hindenburg Research accused Adani of stock manipulation and fraud schemes. This led to overwrought selling in Adani stocks on Friday which also dragged the broader market.
Last week, on Friday, the majority of Adani Group stocks hit their lower circuits, which meant that there existed multiple sellers but no buyers. Adani Transmission, Adani Green Energy, and Adani Total Gas closed at 20% lower circuits each on January 27th. While Adani Power and Adani Wilmar also took a beating to get locked at 5% lower circuits each. Further, Adani Ports also struggled and tumbled by over 16% at the end of the day.
Meanwhile, Adani’s flagship company, Adani Enterprises, which launched its FPO on Friday, plummeted by at least 20% before closing at ₹2,762.15 apiece on the BSE.
FPO’s Day 1!
On the first day of the issue, Adani Enterprises recorded bidding of merely 4,70,160 equity shares on a cumulative basis against the offered size of 4,55,06,791 equity shares, as per BSE data.
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