Credit Suisse halt in acceptance of Adani Group bonds shaves off ₹1.73 lakh cr on Budget day

Adani Group, led by its flagship company Adani Enterprises, found themselves in the midst of a slide just one day after the successful completion of its ₹20,000 crore FPO, India's largest secondary share sale till date.

On Budget day, the Group lost ₹1.73 lakh crore in market cap on the back of news that Swiss Finance giant Credit Suisse has stopped accepting bonds from Adani Group of companies as collateral for margin loans to its private banking clients.

Bloomberg reported that the Swiss lender’s private banking arm has assigned a zero lending value for notes sold by Adani Ports and Special Economic Zone, Adani Green Energy, and Adani Electricity Mumbai. It had previously offered a lending value of about 75% for the Adani ports, as per the report.

Since the launch of FPO, total market cap of Adani Group fell from ₹19.21 lakh crore to ₹11.86 lakh crore, a fall of ₹7.35 lakh crore or 38.26%. Since the launch of FPO, Adani Enterprises has lost ₹1.43 lakh crore while Adani Power, Adani Wilmar, Adani Port, Adani Total Gas, Adani Transmission,  Adani Green, ACC,  and Ambuja lost ₹23,000 crore, ₹13,000 crore, ₹57,276 crore, ₹2.19 lakh crore, ₹1.16 lakh crore, ₹1.21 lakh crore, ₹8,833 crore and ₹33,338 crore, respectively.   

Market Cap of Adani Group at the end of December 2022 was ₹19.63 lakh crore but by Wednesday afternoon the market cap of the group came down to ₹11.86 lakh crore, a fall of 39.60% in this calendar year.

Investors’ scrutiny has intensified about the debts of Adani Group after the release of the Hindenburg Report. A few days back, Fortune India reported that the conglomerate has at least $289 million (equivalent to ₹2,355 crore assuming $1= ₹81.5) worth of dollar note coupon payments due in 2023. In the next two months Adani Group will face an interest payment of $90.75 million, as per Bloomberg. By March 2023, Adani Port will face an interest payment of $40.45 million while Adani Transmission, Adani Electricity Mumbai, Adani Green and Adani International Container will have to shell out $10 million, $19.7 million, $16.4 million and $4.2 million respectively.   

Between 2021 and 2022, Adani Group doubled its market cap from ₹9.62 lakh crore to ₹19.63 Lakh crore. 

Meanwhile, on the Budget day trading session all Group companies posted a market cap loss with Adani Enterprises, the Flagship company recording the biggest slide of 28%, losing ₹90,000 crore in market cap.

All Adani Group companies were in red at the end of the trading session with Adani Power registering a loss of ₹4,000 crore while Adani Wilmer lost ₹3,000 crore, Adani Port lost ₹23,500 crore, Adani Total Gas lost ₹23,200 crore, Adani Transmission lost ₹3,200 crore , Adani Green lost ₹9,500, ACC lost ₹2,300 crore and Ambuja Cement lost ₹13,000 crore.

The Hindenburg report alleged that Gautam Adani, Chairman of the Adani Group, has amassed a net worth of roughly $120 billion, adding over $100 billion in the past 3 years largely through stock price appreciation in the group’s seven key listed companies, which have spiked an average of 819% in that period.

“Even if you ignore the findings of our investigation and take the financials of Adani Group at Face Value, its 7 key listed companies have 85% downside purely on a fundamental basis owing to sky-high valuations,” the report states.

Fortune India did a quick valuation comparison for Adani Group companies with its market peers.

Adani Total Gas that locked in a lower circuit of 20% on Monday commands a market cap of ₹2.09 lakh crore. But the government-owned gas distribution company Indraprastha Gas (IGL) sports a market cap of just ₹29,676 crore, almost ₹1.7 lakh crore or 85% less than Adani Total Gas market cap . IGL Supplies gas to 21 cities while Adani Total has presence in just 11 cities. Similarly, another PSU Mahanagar Gas commands just ₹8,699 crore market cap.

Adani Transmission, another group company, had a market cap of ₹1.92 lakh crore while PSU giant Power Grid Corporation sports a market cap of ₹1.51 lakh crore, almost 21.3% less than Adani Transmission. To be sure, in FY22 Power Grid registered a net profit of ₹16,745 crore while Adani Transmission net profit stood at ₹1,235 crore.   

NTPC with approx 72,000 MW power production capacity has 4 times Adani Power’s generation capacity of 13,650 MW. But the government company’s market cap of ₹1.64 lakh crore is just two times that of Adani Power market cap of ₹82,000 crore. In FY22, NTPC posted a net profit of ₹15,940 crore, while Adani Power’s profit stood at ₹4,911 crore.