Concerns are also growing about the conglomerate’s access to financing. (File)
The stock price plunge in Gautam Adani’s debt conglomerate entered a third week as his flagship company suffered another fundraising setback and a major rating agency downgraded its outlook for two of its companies.
All 10 shares of the group fell during early Mumbai trading on Monday. Flagship Adani Enterprises Ltd. fell as much as 9.7%. The collapse since US short-seller Hindenburg Research made allegations of fraud against the group in a Jan. 24 report has wiped out $118 billion, or more than half the market value of its companies. Adani has repeatedly denied the claims.
The repercussions of the brutal sell-off are spreading far and wide as concerns grow over the exposure of financial institutions and investors to the conglomerate. The uproar has disrupted parliament and India’s main opposition party is stepping up pressure on Prime Minister Narendra Modi for his silence on the issue. It has scheduled a nationwide protest on Monday to highlight the risk to small investors.
Meanwhile, concerns about the conglomerate’s access to finance are also mounting. Adani Enterprises has suspended a major bond sale, Bloomberg News reported Saturday, less than a week after it abruptly abandoned a record offering in domestic stocks. S&P Global Ratings lowered its outlook for Adani Ports & Special Economic Zone Ltd on Friday. and Adani Electricity Mumbai Ltd. to negative.
“Adani had a lot of debt, so in terms of corporate governance, there are always question marks around them,” Catherine Yeung, an investment director at Fidelity International Ltd., told Bloomberg Television on Monday. “This really reiterates that, especially in emerging markets, you have to have real insight into companies and really find details about their balance sheet.”
The total debt of the Adani Group is “only about $30 billion,” Chief Financial Officer Jugeshinder Singh told news channel CNBC TV-18 in an interview broadcast on Jan. 30, without elaborating.
Indian authorities stepped in this weekend to calm frayed nerves over the unrest, saying regulators are competent enough to deal with the fallout and banks’ exposure to the group remains contained.
A slew of quarterly earnings for the group will be out in the coming days, led by the planned release of Adani Transmission Ltd. later on Monday, giving investors more opportunity to scrutinize financial health.
“This week’s focus is on Adani Group companies reporting earnings – and their comments on debt sustainability,” said Charu Chanana, a strategist at Saxo Capital Markets. “It is still necessary for Adani Group to respond coherently to the allegations of fraud and to emphasize its sound financial position to restore investor confidence.”
(This story has not been edited by DailyExpertNews staff and is auto-generated from a syndicated feed.)
Featured video of the day
“90% of jobs in India are given by unorganized sector”: Ex-Minister of Bengal Amit Mitra