Adani Sales and net profit for the third quarter of Adani Total Gas climbed by 17%.

Adani Sales and net profit for the third quarter of Adani Total Gas climbed by 17%.

Adani Total Gas recorded a net profit from continuing operations for the third quarter of FY23 of Rs 150.2 crore, up more than 17% from Rs 127.60 crore for the previous quarter. The company’s operating revenue for the three months ending in December climbed by 27.2%, from Rs. 931.8 crores in Q3FY22 to Rs. 1,185.5 crores in Q3FY23.

Before the release of the Q3 results, shares of Adani Total Gas fell 5% to Rs 1,321.45 per. In the December quarter, the Adani group company’s EBITDA climbed by 13.1% to Rs 229.9 crore from Rs 203.3 crore the previous quarter. EBIT Margin was down from 21.8% a year ago to 19.4% for the quarter.

As the amount of LNG rises, the volume of PNG falls.

In the first nine months of FY23, Adani Total Gas’ CNG volume increased by 30% due to consumer activity and the growth of the CNG station network. Due to high PNG prices driven by increased gas costs, lower gas consumption, particularly by industrial consumers, and lower gas use, PNG volume decreased by 11% yearly.

A significant contributor to the 98% increase in gas prices was the substitution of the UBP price for the APM pricing for domestic PNG and CNG. While there was less of a gas shortage in UBP pricing, the cost of R-LNG, purchased for the Industrial and Commercial segment, climbed.

Adani Total Gas has a solid balance sheet.

By the company’s regulatory filings, Adani Total Gas has a “Healthy Balance Sheet,” with a debt-to-equity ratio of 0.4X and a net debt-to-EBITDA (annualised) ratio of 0.9X. It also has a Return on Capital Employed rating of roughly 20.8% and an ICRA rating of A.A.- (Stable).

It will keep focusing on keeping the return ratios steady. 32 E.V. charging stations are available right now, distributed among several locations. Adani Total Gas declared in a statement that construction on Barsana near Mathura had begun and that the first stone had been laid.

For loans to the flagship company, companies in the Adani Group offered shares as security.

The Indian conglomerate’s flagship Adani Enterprises, which cancelled a $2.5 billion share sale during a demand collapse, has pledged shares from three Adani group companies for lenders, according to the debt trustee agency.

The organisation that Adani Ports and Special Economic Zone, Adani Transmission, and Adani Green Energy Ltd. pledged shares to SBICAP Trustee Co. is a part of the State Bank of India, the country’s largest state lender.

Since a U.S. short seller published a negative report on the “apples-to-airports” conglomerate on January 24, the Adani group, owned by billionaire Gautam Adani, has seen its market value drop by more than $100 billion.

Hindenburg Research charged the organisation with manipulating the stock market and inappropriately utilising offshore tax havens. The firm’s conclusions were ignored, and the company denied all allegations of improper behaviour.

India’s market watchdog is looking into the relationships between the Adani group and some of the conglomerate’s botched share sale investors.

The SBI Standby L.C. facility of USD 300 million comprises extra collateral in the form of the pledge of shares of three group companies for the Carmichael project of the Adani group in Australia. Each month’s statutory collateral coverage requirement of 140 per cent is evaluated, and any shortfall brought on by MTM must be filled. Every month of June and July 2022 saw a top-up, and on February 8 2023, a review as of January 31 2023, resulted in the third top-up of this kind. A spokesperson for SBI noted in a note.

“SBI Cap Trustee Company, as the Security Trustee, is to file the same with SEBI, and they do so whenever the number of shares pledged changes. The percentage of equity shares from Adani Green, Adani Ports, and Adani Transmission that have been committed to this project total 1.06 per cent, 1.00 per cent, and 0.55 per cent, respectively.

According to the spokesman, “It is clear that such a share pledge is only meant to serve as additional collateral security over and above the project assets and that SBI supplies no further finance against such shares pledged.

Why Adani’s $100 billion loss didn’t cause India’s markets to crash?

Some observers were concerned that the collapse of the Adani Group’s stock could bring down the nation’s capital markets and, with them, the Indian economy when shares of the company, which was until recently the largest conglomerate in India, started to fall precipitously late last month. The company’s stock lost more than $100 billion in days.

That would be terrifying not only for India but for the entire planet. The only large economy, including China’s, has had robust and consistent growth after pandemic limitations were eased. The nation’s economy just surpassed Britain’s to become the fifth largest in the world.

However, the worries about a broader market contagion have not materialised. Indian stocks had a quiet week in Mumbai, the nation’s financial hub, and have remained relatively stable since the collapse of Adani. Despite a more than 4 per cent decline in U.S. stocks over the same period, India’s main market index is about 2.5 per cent higher than it was a year ago.

The perseverance is evidence of the scale and apparent power of the larger Indian economic scene. Adani plunged dramatically after being charged with fraud and stock manipulation, yet the scandal is a drop in the enormous Indian bucket. About 1.5 million businesses are now located in India, which also has a thriving stock market: Last year, the National Stock Exchange of that country ranged comfortably between $3 trillion and $3.5 trillion.

The market’s resiliency has confirmed that the Adani Group, a family-run infrastructure and energy conglomerate, in some ways stood alone and that the rest of Indian business would undoubtedly like to see more explicitly emphasised.

The shortcomings cited by Adani’s detractors, such as opaque structures, confusing shareholding, and possibly even puffery in the bookkeeping, can also be found in other Indian businesses, but on a much lesser scale. But even in the fast-paced environment of the Indian market, many of the country’s genuinely profitable companies, according to observers, are relative models of goodness.

Infosys and Dr Reddy’s Laboratories are among several businesses that appear on Refinitiv’s ranking of the best-governed companies in the world. Even as it referred to the Adani Group as “the biggest fraud in financial history,” the investment firm Hindenburg Research sounded upbeat about India, calling it “an emerging superpower with a bright future.”

The Reserve Bank of India, the nation’s central bank, immediately indicated on Wednesday that operations would continue as usual, with a possible additional quarter-point increase in interest rates. This brought it into line with its major Western competitors, who also prioritise containing inflation.

When the Adani Group was forced to postpone a significant share offering on February 1 due to Hindenburg’s charges, there was early worry that the mistrust might spread to India’s capital markets. Would domestic or foreign investors randomly sell off their bonds and stocks in India out of fear that their prices would also fall?

As a result of Prime Minister Narendra Modi’s strong relationship with the founder of the Adani Group, Gautam Adani, the reputation of India’s regulatory system has suffered. However, shares of other businesses, whether in the infrastructure sector or another one unconnected to it, continue to rise. Wherever the Adani empire’s fragments may land, the quiet side of Indian capitalism wants to continue making money.

In the years before Mr Modi came to power, Mr Adani vociferously positioned his business as being in the service of the Indian government. When Hindenburg attacked his conglomerate, it mounted a nationalistic defence, charging its detractors of producing “anguish for Indian residents.”

However, the Modi and Adani organisations’ joint character is not typical of 21st-century Indian capitalism. According to Mumbai-based Marcellus Investment Managers founder Saurabh Mukherjea, just 20 companies—or $1.5 trillion worth—added $1.5 trillion in value to India’s public markets during the past ten years.

Some of them, like Adani, are very vocal and proud of their power and political ties. However, 90% are “clean, well-run franchisees,” according to Mr Mukherjea. The top executives at “the biggest, most reliable money-compounding machines keep their mouths shut and their heads below the parapet.”

For example, the chief executives of companies like Asian Paints and HDFC Bank, rarely seen hugging politicians, are often obscure to the Indian people. Privately, a few of the nation’s corporate titans are pleased to see Mr Adani get the retribution they believe he deserves.

They think it will improve corporate governance, not only for personal reasons. By requiring the government to respond to inquiries on the subject on Friday, India’s Supreme Court also made it clear that it thought there was potential for improvement.

Only some people will, however, discuss Mr Adani in public. Even though he has lost strength, his pals are still firm. Sanjay Reddy, CEO of GVK, a competing infrastructure company that lost its most lucrative airports to the Adani Group following a federal agent raid, went on the radio to refute a politician’s claim that the government “hijacked” the airports for Adani.

It is too early to predict the Adani Group’s trajectory or how far it will fall. As bargain hunters purchased shares at fire sale rates, the disastrous decline in the stock price of a corporation that was once valued at $220 billion came to an abrupt halt early this week, about halfway down to zero.

However, Adani shares started to fall again later in the week after MSCI World, a significant index, decided to cut some of the stocks’ weighting, which prompted traders to dump the company.

The company’s founder, Nathan Anderson, stated on Twitter that the MCSI judgement had “confirmed” the firm’s work. Since Hindenburg accused Adani of financial wrongdoing in the weeks prior, some banks have refused to accept Adani shares as security.

Moody’s cut its outlook on six Adani bonds to the point where they are barely investment grade. Others have cautiously defended Adani. Signals are still erratic: For instance, Norway’s national wealth fund sold three Adani stocks simultaneously as Goldman Sachs rated a subsidiary, Adani Ports, as a “buy.”

Even if the worst alleged about Adani proves to be accurate, it has not engaged in “a con game,” according to Aswath Damodaran, a finance professor at New York University.

According to Professor Damodaran, Adani had taken “a risk, perhaps a poorly thought-through one” by taking on significant debt to support its growth. Still, such risks are common in the infrastructure sector, particularly in India, where investors may anticipate continued strong growth for years to come.

One worry that surfaced as the Adani Group started to decline was that its problems would spread through its lenders and affect other borrowers. However, as its financial records have been examined, it has become apparent that most of its debt is held by foreign banks and lenders supported by the Indian government, primarily the Life Insurance Corporation of India and the State Bank of India.

While neither presents a significant risk of suffering for most Indians, the fiscal deficit would be burdened if the life insurer sustained losses in the billions. Nevertheless, there is a chance that Adani may possess covert power. If it turned out to have hidden loans through some of the shell businesses Hindenburg has investigated, it might help to explain why it tried to inflate its valuation to absurd levels.

Adani’s ambitious aspirations for constructing Mr Modi’s infrastructure and solar panels programme would be foiled if it declared bankruptcy; the likelihood of this happening needs to be clarified. Even then, if its primary assets, such as ports and power lines, were to be taken over by creditors, they would still be valuable.

Even though the verdict against Adani is still pending, the company’s name has become politically fraught in India. During a few boisterous annual sessions of Parliament, the opposition would yell, “Modi-Adani, bhai-bhai” or “Modi-Adani, like brothers.”

The prime minister gave as good as he received, once disparaging a rival’s family name but never once using the name Adani.

edited and proofread  by nikita sharma