Billionaire Gautam Adani-led Adani group shares were under stress on Monday, with 5 out of 10 listed entities hitting their respective 5% lower circuit limit on the BSE. The conglomerate’s stock fell after Moody's cut the outlook of four group companies to negative from stable while maintaining the stable outlook on four other firms. The sentiment was further dented as the U.S.-based index-provider MSCI cut free-float designations of four group firms, which could impact their index weightings. 

Extending their losing streak, Adani Total Gas, Adani Green Energy, Adani Transmission, Adani Power, and New Delhi Television (NDTV) hit 5% lower circuit limits on the BSE in early trade today. Besides, Adani Enterprises, Adani Ports and Special Economic Zone, Adani Wilmar, ACC, and Ambuja Cements fell between 2-5% during the trade so far.

Adani Total Gas Ltd (ATGL), a joint venture between Adani Group and TotalEnergies, has lost nearly 70% of its market value in the last fifteen sessions following allegations against Adani group by the U.S.-based Hindenburg Research. The stock fall continued even after French energy major TotalEnergies previous week clarified that the investments in Adani’s entities were undertaken in full compliance with applicable Indian laws, and its own internal governance processes. TotalEnergies’ exposure to the crisis-ridden Adani group stands at $3.1 billion as of December 31, 2022, representing 2.4% of the company’s capital employed and only $180 million of net operating income in 2022.

The Adani group companies have lost a cumulative market capitalisation of more than $110 billion since Hindenburg released a report on the Gautam Adani-owned conglomerate on January 24. The report spooked investors’ sentiments and led to sharp volatility in the group companies' share prices, forcing the conglomerate to withdraw its ₹20,000-crore follow-on public offer (FPO) despite successful completion. In a bid to restore investors’ confidence, promoters of Adani group companies last week announced to prepay of over $1.1 billion of loans to release some pledged shares in Adani Ports & Special Economic Zone, Adani Green Energy, and Adani Transmission.

In a fresh development, three Adani group companies - APSEZ, Adani Transmission, and Adani Green Energy - have pledged additional shares to SBICAP Trustee Company, a unit of India's biggest lender, State Bank of India (SBI). As per the exchange filing, 75 lakh more shares of APSEZ have been pledged, taking the total to 1% of all shares with SBICAP. In the case of Adani Green, 60 lakh more shares were pledged to a total of 1.06%, while Adani Transmission pledged 13 lakh more shares, taking the total to 0.55%.

Last week, Global ratings agency Moody's Investors Service affirmed the ratings on eight Adani Group companies. However, at the same time, it has changed the outlook on four issuers to 'negative' from 'stable', while maintaining the 'stable outlook' on the other four companies. According to Moody's, these ratings actions follow the significant and rapid decline in the market equity values of the Adani Group companies since the release of the report. The companies, whose ratings have changed to 'negative' from 'stable', are Adani Green Energy Ltd (AGEL) (Ba3 ratings affirmed); Adani Green Energy Restricted Group (AGEL RG-1) comprising Adani Green Energy (UP) Limited; Parampujya Solar Energy Private Limited; Prayatna Developers Private Limited (Ba2 ratings affirmed); Adani Transmission Step-One Limited (ATSOL) (Baa3 ratings affirmed); and Adani Electricity Mumbai Limited (AEML) - (Baa3 ratings affirmed).

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