Adani Group m-cap crosses pre-Hindenburg level as stocks soar post exit polls

The total market capitalisation of Adani Group, the ports-to-power conglomerate headed by billionaire Gautam Adani, has crossed the "pre-Hindenburg level", reports said on Monday, June 3.

Shares of all the listed entities of Adani Group jumped sharply during the early trading, leading to the m-cap rising by over ₹2 lakh crore to ₹18.5 lakh crore.

The sharpest climb was recorded by Adani Power, which surged by 12% during the first hour of trading, followed by Adani Ports climbing by 9%. The flagship Adani Enterprises rose 7%, Adani Energy Solutions 8%, NDTV 5%, Adani Wilmar 3.5%, Adani Total Gas 7%, Ambuja Cement 4%, and ACC 3%.

The rally coincided with the record highs logged by the benchmark indices at the opening bell. The NSE NIFTY 50 opened at an all-time high of 23,338.70 points, whereas, the BSE SENSEX opened at a record peak of 76,583.29.

Hindenburg saga

Pre-Hindenburg means the period before January 2023, when the US-based activist short seller Hindenburg Research had released a damning report that accused the Adani Group of stock manipulation and accountancy fraud.

Despite the charges being rejected by the conglomerate, the report had led to a selling-spree, with more than $130 billion of the group's market capitalisation being wiped out by February 2023.

However, Adani stocks have consistently recovered since mid-2023 as the allegations levelled in the Hindenburg report did not lead to regulatory crackdown, and failed to deter investors from reposing faith in the group.

Improving debt ratio

In the aftermath of the Hindenburg episode, Adani Group has been pre-paying its loans and strengthening its balance sheet to boost investor confidence. The conglomerate's net debt has reached below 2.5 times its earnings before interest, taxes, depreciation and amortisation (EBITDA).

The net debt declined to 2.19 times of EBITDA in the financial year ended March 31, 2024, Adani Group said in an investor presentation.

In absolute terms, the net debt stood at ₹1.81 lakh crore at the end of FY24. On the other hand, cash reserves at the group level stood at the highest-ever at ₹59,791 crore.

Of the total debt, domestic banks and foreign banks have a share of 36% and 26%, respectively. Overseas capital markets have an exposure of the remaining 29%.

Power sector seen as key growth driver

Adani Group sees the power sector as one of the key growth drivers for the conglomerate. In its annual report released last month, the company said creation capacity of Adani Power will increase to 24,270 MW by 2029, as compared to the current capacity of 1,600 MW.

The key drivers of this projected growth are "rising urbanisation and consumption of power by domestic and commercial users, growth impetus being given to the manufacturing sector through various production-linked incentives, higher demand for irrigation, railway traction, etc," it said.

"On the other hand, one of the major policy thrusts of the Government, a reduction in Transmission & Distribution losses, which is projected to improve from 16.5% in FY 2021-22 to 12.6% in FY 2031-32, will partially temper the translation of growth in energy requirements to overall electricity demand," the report added.

Adani Group also noted that in the backdrop of rising power demand, combined with the push for renewable energy, its arm Adani Green Energy has revised its FY30 target to 50 GW from 45 GW.