Adani Ports’ Shares Recovery Raises Questions About Market Manipulation

A recent rise in the Adani Group‘s stocks gathered momentum on Tuesday. It helped the conglomerate’s port subsidiary emerge as the first of its ten entities to make up for all losses caused by Hindenburg Research’s bombshell research in late January.

In early Mumbai trade, all ten Adani equities were up, with Adani Ports as well as Special Economic Zone Limited up 7.7%. Adani Enterprises Ltd. surged over 19% after a similar gain on Monday.

On Friday, the Supreme Court-appointed body tasked with investigating the public interest disputes in the Adani-Hindenburg conflict issued its report. The panel concluded that there was no fault on the part of the regulator regarding the Adani-Hindenburg case.

Since that time, a group-wide rise has contributed 1.96 lakh crores to the Adani Group’s total market value this week. Following Thursday’s closure, the aggregate market value of ten Adani stocks has increased by roughly $22 billion.

The total value loss since Hindenburg‘s revelation is currently around $105 billion, compared to as high as $153 billion during its peak.

The ports division includes billionaire Gautam Adani’s most valuable assets and is regarded as the group’s crown jewel by market observers. It also happens to be the most closely followed Adani stock by sell-side analysts.

According to a report, all 20 experts covering the stock currently have a buy rating. “The Fundamentals for Adani Ports’ operations continue to be solid,” stated Deven Choksey.

“Because of its strong cash-generating capacity, it will receive top priority among investors,” he said. Choksey added that the company is still under-owned by local institutional investors, who prefer companies with high cash-generating ability.

The court panel stated in a 173-page report released last week that based on information gathered by SEBI, it saw “no evident pattern of manipulation” in the steep stock-price rise in Adani’s companies that can be attributed to “any single entity or group of connected entities.”

This referred to Hindenburg’s core allegation, which alleged that overseas shell companies linked to the Adani family were offering up the empire’s shares. The investigations are still ongoing.

The court has given the regulator until August 14 to complete its inquiry. Last month, SEBI petitioned the Supreme Court for an additional six months to investigate the issue.

The agency claimed that due to the intricacy of the case, the inquiry would require 15 months to complete. As stated by SEBI, there may be up to eight potential infractions that require further time to investigate.

The conglomerate was accused of fraudulent accounting, stock manipulation, and other financial wrongdoing, headed by billionaire Gautam Adani. Even though the firm and Adani both denied the charges, the stocks fell after January 24.

Adani Wilmar shares increased by 9.99 percent, Adani Power at 5%, Adani Transmission at 5%, Adani Green by 5%, Adani Total Gas by 5%, and NDTV by 4.99% on Tuesday.

Ambuja Cements’ stock increased by 4%, while ACC increased by 2.87 percent. During the early trade, certain group stocks also reached their upper circuit boundaries.

Adani Ports’ two US-currency bonds due in 2027 climbed by around 0.2 cents on the US dollar on Tuesday. They continue to be trading at 6% lower than before the Hindenburg report.

Adani Ports currently operates 12 ports in India: Mundra, Dahej, Tuna, along with Gujarat’s Hazira. Goa’s Mormugao and Dighi in Maharashtra are located along the western coast. Dhamra within Odisha, Andhra Pradesh’s Krishnapatnam, and Gangavaram.

It also includes Tamil Nadu’s Ennore, Karaikal, along with Kattupalli on the eastern part of the coast. Adani Ports reported a 9% YoY increase in port cargo volumes in FY23, totaling 339 million MMT in its FY23 business update.

“Adani Ports’ major port, Mundra, surpasses all of its closest competitors and remains the biggest port in the country through volumes handled,” stated Karan Adani, CEO of Adani Ports & SEZ.

During the year, the Mundra port processed 155 MMT of cargo volumes, with roll-on roll-off handlings reaching an all-time high of 2.09 lakh cars.

According to ICICI Direct research, Adani Ports & SEZ is the nation’s biggest private port operator. It carries a fifth of the country’s total port freight.

Although Adani Ports has become the sole company to fully recover, Adani Power is not far behind. Its stock prices are now only 5% below their January 24 low.

Other group firms, such as Adani Total Gas as well as Adani Transmission, have witnessed significant drops of 81% and 69%, each, and have plenty of miles to go. Even when the Adani flock’s market value was melting, Adani Ports stock was the most stable.

This company’s stock was one of the slowest to collapse. It is the first in the group to recoup all of its post-Hindenburg losses.

Adani Ports and SEZ shares surged 6% to $773 per share on Tuesday, surpassing the January 24 close of $761. That was the day the Hindenburg Research report, located in the United States, was released, causing a group-wide selloff.

The research firm then announced that it had placed short bets in the group’s equities.
However, by mid-day trade, the stock had lost some of its lustrs and is presently trading at $746 per share.

As a result of Hindenburg’s report, shareholders sold Adani shares, forcing the company to halt a $2.5 billion stock sale.

Previously, media sources suggested that the multibillion-dollar corporation had reduced its revenue growth objective for the following fiscal year to 15% to 20%, down from 40%. However, the recent increases may cause the company’s board of directors to rethink its strategy.

APSEZ finalized the sale of its Myanmar port earlier this month worth $30 million. It was less than the amount it invested in the project.

The transaction was revealed in May 2022, following a military takeover in Myanmar that resulted in a crackdown on huge protestors, prompting US sanctions. The transaction was postponed due to difficulties in completing project completion conditions.

It had originally intended to depart around March and June of 2022. The corporation had put $127 million into the endeavor, comprising a $90 million down payment on property.

Last month, Adani Ports also announced a buyback plan for some debt securities to partially prepay near-term debt obligations. It had begun an offer of a maximum of $130 million in total principal amount for the existing 3.375% senior bonds due in 2024.

The corporation announced a tender for a maximum of $130 million in current debts. “After a successful conclusion of the aforementioned tender offer, the business expects US$520,000,000 in notes to stay outstanding (“outstanding notes”)”.

“Following this tender offer, the business intends to purchase approximately US$130,000,000 of outstanding notes for cash in every one of the next four quarters,” it explained last month.

From their 52-week lows, Adani T, Adani W, as well as Ambuja Cements have rallied 31-36%. ACC along with Adani Total Gas are two equities that have yet to show signs of revival.

Both of these equities have only recovered 14% of their 52-week lows. Given its high values, Adani Total Gas became the most heavily discounted of the group equities.

Adani Ports’ stock has increased 84% since its 52-week lows. Adani Power shares have recovered 87% from their 52-week lows after hitting the 5% upward circuit for a third consecutive day.

Proofread & Published By Naveenika Chauhan