Regaining lost ground, the Adani way

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Regaining lost ground, the Adani way

| Updated: January 24, 2024 15:55

Nearly a year back, when Hindenburg Research published its report accusing the Adani Group of brazen stock price manipulation, it was hard to imagine that the conglomerate would ever overcome the crisis and resume its upward trajectory.

And as a report in The Times of India notes, the group’s perceived closeness to the government further sullied its image.

The questions about the group’s opaque offshore companies didn’t stop.

The conglomerate insisted it had complied with laws and didn’t receive favours from the government.

But the group has bounced back. And how!

As they say, it needed a stroke of luck, which came in the form of the Supreme Court’s verdict rejecting appeals for a special investigation.

Following the verdict, the group’s stocks rallied up to 12%, indicating that it may win the faith of investors.

The TOI report mentions that the combined market value of 10 listed Adani companies is roughly $175 billion, an increase of approximately 112% from the low of $82 billion in February last year.

Affirmation that the Adanis were gradually regaining lost ground came in the form of $553-million investment by a US-backed agency in the group’s port business in Sri Lanka.

“The silver lining of the Hindenburg report was that investors, who were unable to get entry into Adani shares at a good price, got the opportunity to own these stocks,” Alok Churiwala, managing director at Churiwala Securities Pvt in Mumbai, told the daily.

The report further highlights that the conglomerate’s net debt dropped 3.5% to $21.72 billion in the six months through September. Its net debt-to-Ebitda ratio reduced to 2.5 in September as opposed to 3.3 in March. 

As of January 19, 13 of the group’s 15 dollar denominated bonds were above 80 cents on the dollar. Additionally, it refinanced $3.5 billion debt in October, another indication of confidence among creditors.

Bloomberg data, as cited in the report, reveals that the conglomerate deals in nearly half of all shipping containers in India, a third of all coal transported, and almost one-fifth of private thermal power capacity.

“The government stands behind the company and it serves important functions in key areas of the economy,” Sabrina Jacobs, London-based client portfolio manager for fixed income at Pictet Asset Management, was quoted as saying.

Meanwhile, the family is joining dozens of high-net-worth individuals who wish to safeguard their assets by establishing a Special Purpose Vehicle in the international financial hub of Abu Dhabi.

The report pointed out that late in February, Vinod Adani, the elder brother of Adani and resident in Dubai, resigned as director of three companies related to the family’s contentious Australian coal mine. Hindenburg claimed he played a key role in opaque offshore entities associated with the conglomerate.

As Michael Kugelman, director of the South Asia Institute at the Wilson Center in Washington, sums up: “(Adani) keeps facing reputational challenges, but he shakes them off and keeps doing business.”

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