(Bloomberg Opinion) — Adani Group companies have seen more than $135 billion of stock market value wiped out since Hindenburg Research’s explosive report, but none has been hit as hard as Adani Total Gas Ltd.
Bloomberg’s Most Read
The stock has lost more than three quarters of its value since the short sale report was published on January 24. However, it is the second best valued among the entities in the group (it was the most expensive before the Hindenburg accusations) and has relatively less liquidity. Hindenburg had calculated that, on average, seven of the conglomerate’s stocks were 85% overvalued.
Adani Total went down by its limit on Monday. She has done so every day since Jan. 27, data compiled by Bloomberg shows. Indian stock markets adjusted the daily limit on shares from 20% to 5% as the sell-off worsened.
Adani Total Gas “is under fundamental and technical pressure, which has led to the fall,” said Abhay Agarwal, a fund manager at Piper Serica Advisors Pvt. A fall in gas prices in Europe adds to the specific problems of the company and “will put pressure on profitability,” he added.
Concerns about access to offshore finance at the Adani Group persist even as the shock to the broader Indian market from allegations of stock manipulation and accounting fraud raised by Hindenburg is beginning to abate. Billionaire Gautam Adani and his companies have taken steps ranging from paying down loans to pledging to cut leverage ratios, but debt levels and cash flow continue to worry investors.
Nine of the group’s 10 shares were down in Mumbai on Monday. Adani Green Energy Ltd. and Adani Transmission Ltd. also fell on their 5% cap.
Following the Hindenburg report, French energy giant TotalEnergies SE has suspended a multi-billion dollar plan to produce green hydrogen with Adani Group, in a setback for the gas unit. Another concern is Adani Total Gas’s debt levels.
The company faces combined debt payments due in the fourth quarter of its fiscal 2023 and fiscal 2024 that amount to more than its cash balance, according to an exchange filing. However, it also has a cash flow from assets of Rs 9,320 crore.
The stock’s float, or the amount available for trading on the public market, is around 19%, according to data compiled by Bloomberg. That’s the lowest among the bunch after Adani Wilmar Ltd. MSCI Inc. cut what it considers the company’s freely tradable shares in its latest quarterly review of the index, but has since delayed implementation.
–With the assistance of Bhuma Shrivastava and Divya Patil.
(Adds details of Monday’s movements in the group’s shares in the sixth paragraph.)
Bloomberg Businessweek Most Read
©2023 Bloomberg L.P.