The misleading reports on Adani Group, India’s largest critical infrastructure developer that has undertaken several projects which are of strategic priorities for the country’s development have been unsuccessful in having any substantial impact on the group’s business performance as well as its ability to create shareholder value.
The Adani Group’s stocks have rebounded strongly since the release of a short-selling report in January 2023. Four of the group’s largest companies—Adani Enterprises, Adani Ports, Adani Green, and Adani Power—have gained over 100% from their lows. Adani Ports, the most widely held institutional stock in the Adani portfolio, is now trading above its pre-report price. Likewise, Adani Power is also trading above pre-report price levels. Despite the recent reports, the leading group stocks closed in the green on Friday, indicating a lack of trust in these misleading reports.
Significant investments by large global institutions in recent months, including a sovereign wealth fund, have bolstered confidence in the group’s businesses. It is worth noting that these investors which include Qatar Investment Authority and GQG Partners are repeat investors which were already large shareholders in the group’s businesses. Furthermore, none of the long-only investors including France headquartered Total Energies, Abu Dhabi based IHC, Qatar based QIA and US headquartered GQG Capital Partners have exited their investments from the group businesses and have continued to support, some through increased participation. This is because the group has been a huge value creator for each of these investors.
Stake sales to these investors have also enhanced liquidity at the promoter level, which can be utilized for strategic priorities. The group has raised nearly USD 10.5 billion through strategic stake sales to long-only investors. Around USD 5 billion is posted in the short-seller report. The Adani Group remains committed to attracting more such investors as part of its 10-year capital program initiated in 2016 to participate in the world’s largest and fastest-growing infrastructure development platform.
In addition, the rating agencies have reaffirmed the ratings of all the listed group companies. This has allowed continued market access. In the first quarter of the current financial year alone, the group has raised INR 17949 crore from international as well as domestic banks and capital markets.
The trust and confidence demonstrated by these investors underscore the strength of the group’s businesses and its commitment to high governance standards. Financially, the group continues to perform well, reporting record profits in the first quarter of FY24 following the short-seller report. The group’s portfolio of listed companies achieved an EBITDA of INR 23,532 crore, a 42% increase year-on-year, almost matching the entire FY19 EBITDA of INR 24,780 crore.
For FY23, EBITDA reached INR 57,210 crore, a 42% YoY increase, with improved debt metrics, boasting a net-debt to EBITDA ratio of three times. The portfolio companies also held INR 42,115 crore in total liquidity.
Importantly, the Adani Group operates within the bounds of the law and under the scrutiny of regulatory authorities in respective jurisdictions. The allegations are based on false information and only targeted to malign the group’s image but have no substantial impact on the group’s day-to-day operations.