Shares of Adani Enterprises fell for the second straight session on Friday amid weakness in benchmark indices as investors remain concerned about the prospect of prolonged high interest rates.  The stock has fallen over 10% in the last two sessions after the National Stock Exchange (NSE) placed Adani Enterprises and two other Adani group entities under short-term Additional Surveillance Measure (ASM) framework from March 9. The market sentiment was further dented after India Ratings and Research lowered the outlook of Adani Enterprises' proposed non-convertible debentures (NCDs) to ‘negative’ from 'stable', while it affirmed the long-term issuer rating at 'A+'.

Adani Enterprises shares opened 4.1% lower at ₹1,873.05 against the previous closing price of ₹1,953.10 on the BSE. In the first hour of trade so far, the stock of the Adani group flagship company declined as much as 6.8% to ₹1,899, while the market capitalisation slipped to ₹2.17 lakh crore. In the last two sessions, the stock has tumbled 10.5% after rising more than 70% in the past six sessions, from ₹1,193.50 on February 27 to ₹2,039.65 on March 8.

Meanwhile, other Adani group shares witnessed mixed trading, with 6 out of 10 listed entities floating in negative terrain, in sync with the broader market. Adani Wilmar, Adani Ports & SEZ, Ambuja Cement, ACC, and NDTV were down between 1-4%. On the other hand, Adani Green Energy, Adani Total Gas, and Adani Transmission hit their 5% upper circuit limits, while Adani Power rose over 1%. In comparison, the BSE Sensex was down 602 points, or 1%, at 59,204 levels.

On March 7, India Ratings and Research revised outlook on Adani Enterprises and its proposed NCDs to negative while affirming the long-term issuer rating at ‘IND A+’. The company plans to raise up to ₹1,000 crore via NCDs.

"The negative outlook reflects the uncertainty on the cash flow mismatches resulting from the revised capex plans and the possible sources of funding available which may keep the equity cover lower than 2x," Ind-Ra said in a report.

"AEL, being an incubator, has large, although reduced, capital commitments across different businesses including ANIL, airports, and roads As per Ind-Ra’s previous assessment, the total capex to be undertaken by the company over FY24-FY25 was estimated around ₹1,17,200 crore which as per the management, is being reevaluated. AEL has a committed capex of ₹45,000 crore where financial closure has been achieved," it added.

"From an equity funding perspective, Ind-Ra had earlier relied on the group’s financial flexibility to access the capital markets, venture into strategic partnerships, monetisation of some of the assets and liquidity availability at the promoter level. However, there exist risks associated with capital raise as investments by the strategic partnerships have been put on hold, the promoters have committed to reduce loans against shares to nil by March 2023 which cumulatively reduce equity cover visibility," the agency said.

The brokerage house further said the share sale to GQG Partners has created an additional liquidity buffer at the promoter level which alleviates the risk to some extent. Gautam Adani-controlled conglomerate sold minority stakes in four of the listed companies to American equity investment boutique GQG Partners for ₹15,446 crore. GQG has bought 3.4% stake in Adani Enterprises for about ₹5,460 crore, 4.1% in Adani Ports for ₹5,282 crore, 2.5% in Adani Transmission for ₹1,898 crore, and a 3.5% shares in Adani Green Energy for ₹2,806 crore.

Follow us on Facebook, X, YouTube, Instagram and WhatsApp to never miss an update from Fortune India. To buy a copy, visit Amazon.