What To Expect From Adani Group Stocks When Market Opens Monday

Adani Group stocks bled incessantly over two sessions on Wednesday and Friday after New York-based Hindenburg Research revealed it had taken a short position in the group’s publicly-listed companies and sees 85% downside purely on fundamental basis.

Following the extremely tough two sessions, there are concerns among investors that the plunge could deepen in the coming trading week.

Hindenburg Vs. Adani, Story So Far: As reported by Benzinga India earlier, Hindenburg laid widespread allegations against Adani Group, including those related to overleverage. It alleged Adani has offshore shell companies in multiple countries and questioned the appointment of Gautam Adani’s close family members — who purportedly have regulatory probes open against them — to key leadership positions at the conglomerate.

Adani threatened legal action two days after the publication of the report — Hindenburg hit back saying it would welcome such a move as it would allow the activist short seller to request more internal documents from the conglomerate.

The group led by India’s richest person also published an 18-page presentation as a rebuttal to the allegations, highlighting the involvement of the “Big 6” accounting firms in the audits of eight out of nine of its publicly listed companies among other factors.

How The Market Has Reacted: The investors seemed to widely sideline the rebuttal as shares of all publicly-listed Adani companies plunged heavily on Friday — after the Republic Day break.

This is how Adani Group stocks have traded so far since the publication of Hindenburg’s report:

Adani Enterprises shares have plunged about 20% from the ₹3,442.75 level at the close on Tuesday to ₹2,762.15 at the close on Friday.

The company’s follow-on public offer (FPO) has launched amid the allegations — with subscriptions reaching just 1% of the quota on day one.

The company that has a wide range of business interests — but primarily engages in coal and iron mining — is aiming to sell the shares in a price range of ₹3,112 to ₹3,276. This is significantly above the latest trading price at the bourses.

Adani Enterprises trading in the latest two sessions. Chart: Courtesy of Trading View

Adani Green Energy is among the best-performing stocks on the Indian bourses in the last three years and sees a high level of interest from retail traders amid the rising popularity of the renewable-energy sector.

The stock has plunged about 22.5% in two sessions, from ₹1,916.80 on Tuesday’s close to ₹1,486.25 on Friday’s close.

Adani Ports & SEZ is the company through which Adani Group operates its port. Its shares are down about 21.5% from ₹761.20 to ₹596.95 in the latest two trading sessions.

Adani Power: is a thermal power producer subsidiary of the conglomerate. Its shares have slumped about 26.75% from ₹274.80 to ₹248.05.

Adani Total Gas is a piped natural gas supplier. Its shares have lost a quarter of their value in the two sessions, plunging from ₹3,891.75 to ₹2,928.00.

Adani Wilmar is Adani Group’s joint enterprise with Singaporean company Wilmar International. The FMCG foods company has its most famous product in the Fortune oil brand.

The company went public through a high-profile ₹3,600-crore initial public offering (IPO) in February 2022 — and soon turned a mutlibagger for the investors.

Its shares are down about 10% from ₹572.65 to ₹516.85 in the same time frame.

Adani Transmission is one of India’s largest private power transmission companies; its shares have lost about 27% of their value, falling from ₹2,762.15 to ₹2,014.20 in the two sessions since the publication of the Hindenburg report.

Ambuja Cement & ACC are the latest entrant in the conglomerate. Adani’s acquisition of the cement company Ambuja and its subsidiary ACC completed in September 2022.

The two companies aren’t mentioned in the Hindenburg report but have not managed to escape the consequences of being attached to the Adani Group at a time like this.

Ambuja Cement is down 23.74% from ₹498.95 to ₹ 380.45 in the two sessions while ACC is down over 19% from ₹2,336.20 to ₹1,884.05.

See Also: Union Budget 2023: 5 Expectations From Finance Minister Nirmala Sitharaman

Are The Concerns Of Further Plunge Valid?

Concerns that Adani Group’s woes could deepen aren’t unfounded.

While all Adani stocks struggled as listed above, Adani Green, Adani Total Gas and Adani Transmission hit lower circuits at 20% plunge in Friday’s trading. Adani Power and Adani Wilmar also hit their lower circuits at 5%.

Hitting the lower circuit is considered a grave sign for any stock — as it often means the selling is far from over. With their being multiple sellers left with no buyers for these stocks at the end of Friday’s trading — the woes are likely to deepen — in the absence of any news or event that can bring about a major change in the market sentiments.

The extremely low subscription rate for the Adani Enterprises FPO is also likely to weigh on investors’ minds.

Adani Group has already made public its intentions to take the legal route against Hindenburg and has also published a rebuttal that has failed to convince the investors. In such a scenario, the group’s next move is being highly watched.

Among other events, leading opposition party, the Indian National Congress has demanded a probe by the Securities and Exchange Board of India (SEBI) into the allegations laid by Hindenburg.

Meanwhile, Adani’s net worth has slipped significantly. India’s richest person now standing below the likes of Bill Gates, Warren Buffett and Larry Ellison on the world rich list — falling to the seventh position from being the world’s fourth richest person just days ago.

Key Event To Watch: Adani Group has prepared a detailed 100-page response to Hindenburg’s allegations that could be published after Adani Enterprises’ FPO ends, according to a Bloomberg report; whether analysts and investors are reassured by the detailed rebuttal remains to be seen.

There is no comment on the matter so far from the central government or the market regulators including SEBI. Any commentary from the authorities would also be a significant event for market movements in Adani stocks.

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Posted In: Emerging MarketsMarketsTrading IdeasACCadani enterprisesAdani GreenAdani Groupadani ports & sezAdani PowerAdani Total GasAdani TransmissionAdani WilmarAmbuja CementHindenburg ResearchShort Seller