AEL adds another 20%, 7 Adani stocks up as group boosts investor confidence

M-cap back above Rs 10-trillion mark; Adani Transmission, Adani Wilmar, Adani Power and NDTV hit upper limit of 5%

The Adani Group stocks gained for a second day on Wednesday after the company took a host of measures to restore investor confidence and ease concerns around its leverage.

Seven out of 10 stocks of the group finished with gains — with the flagship Adani Enterprises (AEL) rallying the most, at nearly 20 per cent.

AEL, which withdrew its Rs 20,000-crore share sale earlier this month despite garnering full subscription, is now up 37 per cent in two days, recouping half the losses it saw after US short-seller Hindenburg Research released a scathing report, alleging financial irregularities in the group. Among steps taken to revive confidence include Gautam Adani and his family prepaying $1.11 billion worth of debt, a vow to improve capital structure of Adani Ports & SEZ (APSEZ) and conducting an independent assessment into the issues of related party transactions. Shares of APSEZ rose 8.3 per cent.

Meanwhile, Adani Transmission, Adani Wilmar, Adani Power and New Delhi Television hit their 5 per cent upper limit.  On the other hand, Adani Green Energy and Adani Total Gas fell nearly 5 per cent each. Furthermore, newly-acquired cement units — ACC and Ambuja Cements — ended the day little changed over their previous day’s close, with the former losing 1.1 per cent and the latter up 0.2 per cent.

As a result, the group added Rs 48,627 crore in market capitalisation (m-cap) with the conglomerate’s combined market value once again surging past the Rs 10-trillion mark. Since January 24, however, the combined m-cap is still down Rs 8.8 trillion — in what has been one of the biggest stock market wipeouts for a business group.

“Deleveraging is expected to be the group’s immediate focus for at least the next year or so. Recent earnings commentary also supports this view. They may go slower on inorganic growth because big acquisitions will require fresh borrowing,” said Abhay Agarwal, fund manager, Piper Serica Advisors. On Tuesday, APSEZ reported third-quarter net income that missed the average analyst estimate. But investors were buoyed by the company’s proposal to repay Rs 5,000 crore of debt.

“Adani Ports’ results are good in the context of the concerns at the moment. Margins are a bit soft but revenue and outlook remain strong,” said Deven Choksey, managing director, KRChoksey Holdings.

“It is a mix of short covering and fresh buying. Technically speaking, cash margins put in have arrested the free fall. Short selling has stopped,” he added. Last week, exchanges shifted AEL, APSEZ and Ambuja to a category of stocks that require up to 100 per cent trading margins and are subject to greater scrutiny to curb short-selling. The purported short-term additional surveillance measure (ST-ASM) Stage 1 has been made applicable to these stocks on new positions created since February 6.

With inputs from Bloomberg