September 18, 2023
Economy International

Adani Group Shares Soar Following Loan Prepayment

Adani Group, led by billionaire Gautam Adani, saw a surge in its stock prices on Tuesday following its decision to prepay some of its loans. This was a much-needed relief for the company which had lost more than $113 billion in market value in just two weeks due to a critical report published by a US short-seller. On Monday, the company announced that it was pre-paying $1.11 billion in loans on shares, which were due to mature in 2024, as a result of the recent market volatility. The move was well received by investors, as JPMorgan confirmed that the group companies were still eligible for inclusion in the bank’s bond indexes.

Anita Gandhi, Director at Arihant Capital Markets, stated that the company’s decision to prepay its loans and its eligibility for inclusion in JPMorgan’s bond indexes were both having a positive impact on the company’s stocks. She also noted that the sharp correction in the group’s stocks was making them more attractive to investors. The National Stock Exchange of India (NSE) revised the maximum daily permissible limit for price moves for Adani Green Energy Ltd and Adani Transmission Ltd from 10% to 5% on Monday, further supporting the company’s stock prices.

On Tuesday morning, the group’s flagship company, Adani Enterprises Ltd, saw a 20% jump in its stock price, while Adani Ports and Special Economic Zone gained 8.9%. The shares of Adani Green Energy rose by 2.7%, and Adani Transmission and Adani Wilmar added 5% each. However, Adani Total Gas Ltd fell 5%, and Adani Power shed 3%. Many of the Adani Group companies are due to report their quarterly results this week, with Adani Ports and Adani Green set to report later in the day.

Despite the stocks staging a recovery, the cumulative losses of Adani Group’s seven listed companies still stand at $105 billion, following the publication of a report by Hindenburg Research on January 24th that alleged the company was involved in stock manipulation and the use of tax havens. The report also claimed that the group had unsustainable debt. Adani Group has denied these allegations and stated that it complies with all laws and has made necessary disclosures over time.

Adani has a total notional value of $7.7 billion in JPMorgan’s CEMBI and JACI indexes, and its dollar bonds remain eligible to be part of JPMorgan’s ESG Global Corporate Index (JESG). The Adani crisis has sparked protests and arrests, with hundreds of members of India’s main opposition Congress party calling for a probe into Hindenburg’s allegations. The company’s stock prices may still be volatile in the near future, but its decision to prepay its loans and its eligibility for inclusion in JPMorgan’s bond indexes provide some stability for investors.

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