Adani stock fall continues; Adani Enterprises; Transmission down up to 10%

Shares of Adani group companies continued on Monday, with Adani Power, Adani Wilmar, Adani Green, Adani Transmission hitting their respective lower circuits. Adani Enterprises also declined 9.5% in early trade amid a report that the flagship company has dropped its plan to raise around ₹1,000 ($122 million) via its first-ever public sale of bonds amid  recent sharp sell-off in the group shares.

Billionaire Gautam Adani-controlled listed entities have been under pressure since January 25 after the U.S.-based investment firm Hindenburg Research released a report, accusing group firms of accounting frauds and stock manipulation. The group, however, refuted all the allegations, which could not soothe investors’ confidence.

On Monday, all Adani group companies opened in red, in sync with the broader market. Adani Transmission was locked in 10%, while Adani Power, Adani Wilmar, Adani Total Gas, Adani Green Energy hit their respective 5% lower circuit limit. Among others, Adani Port & SEZ, ACC and Ambuja Cements also fell up to 3%. In comparison, the BSE benchmark Sensex was down 215 points at 60,628 levels, tracking weak global cues.

In a fresh blow to group stocks, a report suggests that Standard Chartered Plc. has stopped accepting bonds of Adani Group firms as collateral on margin loans. Last week, Swiss finance giant Credit Suisse and Citigroup Inc.’s wealth arm had also made similar announcements following the Hindenburg report. Besides, S&P Global Ratings last Friday downgraded the rating outlook for Adani Electricity Mumbai and Adani Ports to ‘negative’ from ‘stable’, citing concerns about reduced funding access. Besides, S&P Dow Jones Indices announced that it would remove Adani Enterprises from its sustainability indices with effect from February 7. 

Meanwhile, foreign rating agencies Moody’s and Fitch issued statements on Friday saying that adverse developments are likely to have no immediate impact on the credit ratings of Adani group entities. “There are also no near-term significant offshore bond maturities – earliest in June 2024 for Adani Ports and Special Economic Zone Limited (APSEZ, BBB-/Stable); December 2024 for Adani Green Energy Limited Restricted Group 1 (AGEL RG1, BB+/Stable); and 2026 or beyond for all other entities – reducing refinancing risks and near-term liquidity risks,” the American credit ratings agency says in a report.

Moody’s also released a statement on Friday saying that it is assessing the overall financial flexibility, including liquidity position, of Adani group firms given a significant and rapid decline in stock value post release of the Hindenburg Research report. “These adverse developments are likely to reduce the group’s ability to raise capital to fund committed capex or refinance maturing debt over the next 1-2 years,” Moody’s said.

The central government, the Reserve Bank of India (RBI), and SEBI also stepped in to ease investors’ concern about the impact of volatility in Adani group stocks on the overall market and economy.  Finance Minister Nirmala Sitharaman said the country’s markets were well-regulated, while the RBI stated that the banking sector remained resilient and stable and that Indian banks’ exposures to Adani groups were within permissible limit. The Securities and Exchange Board of India (SEBI) on Saturday said it has put in place “a set of well defined, publicly available surveillance measures” to address excessive volatility in “specific stocks”.