Adani Group cuts revenue growth target, capex amid spark by Hindenburg

The billionaire is now looking to rebuild investor confidence after Hindenburg’s scathing report about the group saw its listed entities lose more than $120 billion in market value.

The US Short Seller Report concluded by saying: “After extensive research, we have taken a short position Adani Group companies through US-traded bonds and non-Indian-traded derivative instruments.”

The report made several “allegations” against the group, which has triggered a stock rout. However, the Adani Group has rejected the allegations and denied any wrongdoing, saying the claims are baseless and published a 413-page rebuttal.

Gautam Adani’s group will now shoot for revenue growth of 15% to 20% for at least the next financial year, lower than the 40% growth it originally targeted, said a Bloomberg Report.

Meanwhile, capital expenditure plans will also be scaled down, the report said, as the group prioritizes consolidating its financial health over aggressive expansion.

The change shows how the port-to-power conglomerate is focused on conserving cash, paying down debt and taking back pledged shares, as it scrambles to narrow losses from a report published late Jan. 24.

Even though the group has denied the allegations of accounting fraud and stock manipulation made by the American short seller, the scandal has triggered a decline in the price of their listed shares.

The report said that halting investment for less than three months could save the group up to $3 billion, adding that the plans are still imminent.

It further added that the funds may be deployed to pay down debt or boost cash piles.

As per the report, the plans of the group are still under review and will be finalized in the coming weeks.

Adani group firms pledge additional shares to prime lenders

Three Adani group companies – Adani Ports and Special Economic Zone, Adani Transmission Ltd and Adani Green Energy Ltd – have pledged additional shares to State Bank of India (SBI).

SBICAP Trustee Company, a unit of the country’s largest state lender SBI, said it has pledged shares of 1% of Adani Ports, up from 0.65%, 0.55% of Adani Transmission, up from 0.44%, and Adani for 1.06% of Rs. Green, above 0.68%.

The additional pledges are part of a $300 million letter of credit – issued as a guarantee of payments made by one bank to another – that was extended by SBI to Adani Group’s Carmichael Coal Mining Company, a bank statement said. provided for the project.

SBI said the collateral is reviewed at the end of each month to assess whether it needs to be topped up due to any mark-to-market losses.

soothe anxieties

The Hindenburg Report was published just two days before January 27, the date of the company’s follow-on public offering (FPO). 20,000 crores of Adani Enterprises were ready to hit the market.

In the days following the Hindenburg-triggered stock meltdown, Adani and his companies have been working to allay the concerns of investors and lenders.

The stock selloff resumed after MSCI Inc lowered the amount of shares it considers freely tradable for four companies — a move that would result in a lower weighting in its index.

Adani Group is focusing on allaying concerns about its financial health and strengthening sentiment.

Earlier this month, the group said Adani and his family repaid a $1.11 billion prepaid loan to release pledged shares in the three firms, while the ports unit announced repayment plans on February 8. 5,000 crore in loans in the year starting April to boost key credit metrics.

The group plans to repay a $500 million bridge loan due next month after some banks blocked refinancing of the loan. This was part of the fundraising to finance the acquisition of Bharat Cement assets of Holcim Ltd last year.

Independent audit of group companies

A US short seller plans to hire one of the “Big Six” global accounting firms to evaluate its corporate governance and audit practices following allegations of fraud.

The independent audit will be initiated after the completion of group flagship Adani Enterprises Ltd. A follow-on public offer of Rs 20,000 crore and legal options will be decided based on that, said people on condition of anonymity.

The fresh audit is mainly aimed at restoring public confidence and arresting the fall in Adani Group’s shares.

In Britain, the Adani group last year removed Deloitte as auditor of its various subsidiaries, replacing it with a smaller accountancy firm.

Crowe UK has replaced the Big Four firm as the auditor of UK entities including Adani Energy Holdings Ltd after the Indian firm buys them out in 2021.

Adani Group’s UK subsidiaries include a portfolio of renewable energy plants across India, which were sold by SoftBank Group and Bharti Enterprises to Adani Green Energy Limited in 2021. Audit the accounts.

Earlier this month, the corporate affairs ministry reportedly began a preliminary review of Adani Group’s financial statements and other regulatory submissions made over the years.

with agency inputs