Adani Group share value shrinks more than $100 billion as rout continues

Adani Group has shifted its focus to financial health, debt repayment, cash conservation, and recovering pledged shares to reassure investors.

The combined market value of Adani group shares plunged below $100 billion following a scathing report by a US short-seller.

The ports-to-power conglomerate has lost more than $135 billion in market capitalisation since January 24 when a Hindenburg Research report accused it of accounting fraud and stock manipulation that Adani Group denied repeatedly.

The $135-billion loss marks a significant drop from the conglomerate's peak market capitalisation in September 2022, taking the total erosion beyond $200 billion.

Four out of 10 group firms traded lower on Tuesday. Adani Total Gas experienced the most significant drop in value, losing approximately 77 percent since January 24. Adani Green Energy and Adani Transmission also fell considerably, down 70 percent each. Adani Enterprises saw a decline of 54 percent, and Adani Power decreased by 38 percent.

The crisis has dragged billionaire Gautam Adani's net worth down to $49.10 billion, sending him from the 2nd to 25th rank on the global rich list,  according to Bloomberg. Adani and his companies have hired legal and communication teams, cut expenses and repaid debt as they sought to calm traders spooked by concerns over the group’s access to financing.

The Adani Group has shifted its focus to financial health, debt repayment, cash conservation, and recovering pledged shares to address concerns raised by the Hindenburg report. The group was earlier more focused on an expansion strategy fuelled by debt, but the recent events have led to a change in priorities.

Adani Ports has made a payment of Rs 1,500 crore to SBI Mutual Fund on Monday and intends to prepay Rs 1,000 crore commercial papers due in March. It has also announced plans to repay Rs 5,000 crore of debt in the year starting April. The Adani Group has vowed to prepay a $500 million bridge loan due next month, as some banks have refused to refinance the debt, according to Bloomberg.

On February 6, the Adani Group prepaid $1.11 billion of borrowings to recover pledged shares in three Adani group firms. Adani Power has also cancelled its plan to acquire a coal plant project from DB Power Ltd. Adani Group has decoded to keep off the race for a stake in the state-backed electricity trader PTC India as it aims to conserve cash.

The group has raised over $8 billion from international bond buyers in recent years and has also received foreign-currency loans from global banks worth at least the same amount, according to Bloomberg data. Rating agencies have also revised their outlook for some of the companies under the Adani Group, such as Adani Green Energy Ltd. and Adani Ports & Special Economic Zone Ltd.

MSCI announced last week that it would delay the implementation of the free float updates for Adani Total Gas and Adani Transmission until the May index review. The postponement of these changes would result in an approximate passive outflow of $225 million from these stocks.