Adani Group stocks faced a setback on June 4 as its stocks crashed by up to 18%. This sharp decline came after a period of gains in the past few trading sessions.
The sudden plunge seems to be linked to investors unwinding their speculative positions, possibly to lock in profits or lower their exposure to the market. This correction led to a substantial decrease in Adani Group’s market capitalisation, wiping out over Rs 10 lakh crore.
In the previous trading session, the conglomerate’s stocks had surged, adding Rs 1.4 lakh crore to its value, bringing the total market worth of the group’s listed companies to nearly Rs 20 lakh crore.
During the morning trading hours, Adani Total Gas faced the most significant loss, dropping nearly 18%.
Adani Energy Solutions followed with a slump of 12%, while Adani Power saw a decline of over 10%. Adani Green Energy and Adani Enterprises both experienced a 7% drop.
Adani Ports and SEZ plummeted by 8%, Adani Wilmar by 8.5%, Ambuja Cement by 9.6%, ACC by 9%, and NDTV by 12%.
The surge in Adani Group’s stock prices had been fuelled by strong earnings performance for the fiscal year ending March 2024.
The conglomerate’s EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) soared by 40% Year over Year (YoY) to Rs 66,000 crore in FY24.
Adani Group’s market capitalisation had taken a hit following the Hindenburg report in late FY23.
However, during FY24, the group focused on managing its debt and reducing founders’ share pledges. The total group EBITDA grew by 40% YoY in FY24, with a 5-year compound annual growth rate (CAGR) of +27%.
The group raised fresh funds through equity, debt, and strategic investors, while promoters increased their stake in group companies, leading to a rebound in the group’s market capitalisation.
Jefferies India, in its note, said, “The group is back on an expansion spree and eyeing a $90 billion capital expenditure over the next decade. In the report, we discuss the group’s FY24 performance and the way ahead.”
Most of the group companies witnessed EBITDA growth ranging from 16% to 33%, except for Adani Wilmar, which experienced a decline.
The group’s net debt, including debt related to the acquisition of the cement business, remained steady at Rs 2.2 lakh crore in FY24 compared to Rs 2.3 lakh crore.
There was improvement in the net debt to EBITDA ratio, which decreased to 3.3x in FY24 from around 5x YoY.
Adani Ports and Adani Power saw a reduction in net debt during FY24. However, Adani Enterprises and Adani Green witnessed increased leverage due to new capital expenditure projects undertaken by the companies.