Adani stocks make faster rebound amid steps to pare debt
08 February 2023
Adani Group company stocks that have been sinking following the wild attack by US short-seller Hindenburg Research’s report, made an accelerated rebound on Wednesday on the back of the conglomerates measures to address investor concerns over debt leverage.
Most Adani Group stocks rose, extending their rebound from the rout sparked by US short-seller’s report. Seven of the group’s 10 stocks were up in Wednesday’s session, with flagship Adani Enterprises rallying 20 per cent after surging the most since 2020 the previous day. The stock has more than doubled from the low it hit during the recent selloff.
The meltdown that at one point erased $117 billion from the market value of billionaire Gautam Adani’s companies as Gautam Adani and his family pre-paid some borrowings to release pledged shares of its ports business to improve its debt ratio.
Meanwhile, Adani Group company Ambuja Cements reported higher than expected net income while Adani Ports missed forecasts. Adani Transmission Ltd reported a 78 per cent gain in third-quarter profit. Adani has now shifted focus to earnings from Adani Power Ltd day after six other group companies released results this week.
Adani Ports & Special Economic Zone Ltd climbed as much as 9.4 per cent on Wednesday. Shares of Adani Wilmar, Adani Power and Adani Transmission rallied about 5 per cent each.
Amidst the stock slump investors like Oaktree Capital Management and Davidson Kempner Capital Management picked up debt related to the conglomerate in recent weeks, according to people familiar with the matter.
Speculators are reported to be stocking up Adani shares that have fallen to half their pre-slump prices.
In its report issued last month, Hindenburg Research had alleged the group had inflated revenue and stock price. Adani had repeatedly denied the allegations.
The Hindenburg rogue report that followed the BBC conspiracy, that too allegedly funded by the Red Dragons, has backfired after assurances by the LIC, SBI and the finance minister.
Adani Ports to prepay Rs 5,000-crore debt
A day after the promoters of Adani Group prepaid $1.1 billion loans, one of the group’s listed entities — Adani Ports and Special Economic Zone (APSEZ), announced that it would prepay loans of up to Rs5,000 crore by the end of next month so as to improve its financial metrics.
The company is targeting an earnings before interest, tax, depreciation and amortisation (Ebitda) of around Rs15,000 crore this financial year.
This was revealed by Karan Adani, chief executive officer (CEO) and whole-time director of APSEZ, while announcing the September-December 2022 results.
“Besides, an estimated capital expenditure of Rs4,000-4,500 crore, we are considering total loan repayment and prepayment of around Rs5,000 crore.
"This will significantly improve our net debt-to-Ebitda ratio and bring it closer to 2.5x by March,” Adani said.
APSEZ has a debt of Rs39,277 crore, according to its December quarter results.
Adani added that APSEZ is well placed to achieve the upper end of its full-year revenue and Ebitda guidance for FY23.
“The company also concluded the transactions of Haifa Port Company (Israel), IOTL, ICD Tumb, Ocean Sparkle, and Gangavaram Port.
"It is progressing well on transitioning its business model to a transport utility,” Adani said.
APSEZ shares closed at Rs553.30, up by 1.33 per cent with a total market valuation of Rs1.19,000 crore.
APSEZ’s net debt-to-Ebitda ratio is well within the guided range of 3-3.5x, while the gearing ratio is below one.
“The performance across various debt covenants has been better than the desired levels.
"We have an impeccable track record of fulfilling our debt obligations.
"Our internal accruals enable us to meet the scheduled debt repayment for any of the financial years without any major challenges,” he said.
Two other group entities, Ambuja Cements and Adani Green Energy also announced their results on Tuesday.