Adani shares review: After Hindenburg Research said it stood by its findings regarding alleged share price manipulation and accounting fraud by the conglomerate, Adani Group stocks dropped 5-20% on Friday, wiping out $3.19 trillion in investor wealth.
Adani Enterprise is an Indian conglomerate company headquartered in Ahmedabad, Gujarat, India.
The company operates in several businesses, including ports and logistics, agribusiness, real estate development, and power generation. Adani Enterprise has become one of the largest companies in India, with operations and investments in India and abroad.
There could be various reasons why a company’s stock price falls and it faces losses. Some common reasons include:
Economic conditions: The overall economic situation can affect a company’s performance. A recession, for example, can lead to a decrease in consumer spending, which can hurt the company’s sales and profits.
Competition: Intense competition can put pressure on a company’s margins and market share, leading to decreased profitability.
Regulatory changes: Changes in laws and regulations can increase a company’s costs, impact its operations, and reduce its profits.
Mismanagement: Poor management decisions, such as overinvesting in unprofitable projects or not adapting to changes in the market, can lead to losses.
Natural disasters or other events: Natural disasters, such as hurricanes or earthquakes, can disrupt a company’s operations and impact its financial performance.
It’s important to note that the stock market is influenced by many factors, and stock prices can be volatile in the short term.
A company’s financial performance and stock price can also be impacted by broader market trends and events. It’s important to consider multiple factors and have a long-term perspective when investing in the stock market.
The company’s board of directors met today and decided not to move forward with the FPO despite the full subscription.
The company released a statement in which it stated that by returning the FPO proceeds and withdrawing the completed transaction, it was attempting to protect the interests of its investing community in light of the unprecedented situation and the current market volatility.
Adani Enterprises Chairman Gautam Adani stated that the board felt that moving forward with the FPO would not be morally acceptable under the extraordinary circumstances, citing the unprecedented crash in stock prices.
The board has decided not to move forward with the FPO because “the investors’ interests are paramount, and to protect them from any potential financial losses,” Adani said in the statement.
Even though retail investors shunned the Rs 20,000 crore FPO, the biggest to date in India, the issue was able to pass thanks to strong support from non-institutional buyers, which included the family offices of numerous HNIs and prominent industrialists.
“We are working with our Book Running Lead Managers (BRLMs) to release the funds blocked in your bank accounts for subscriptions to this issue and to refund the proceeds received by us in escrow,” Adani said.
The FPO was under pressure as a result of a damaging report by American short-seller Hindenburg Research, which leveled several accusations of stock manipulation and accounting fraud against the ports-to-energy conglomerate and even forewarned against an 85% decline solely based on fundamentals due to exorbitant valuations.
We have a very strong balance sheet, positive cash flows, secure assets, and a track record of paying down debt.
This choice will not affect our ongoing operations or our future plans. Growth will be controlled by internal accruals as we continue to concentrate on long-term value creation.
The 60-year-old Adani stated, “We will review our capital market strategy once the market has stabilized.”
A Reuters report from earlier in the day claimed that market regulator Sebi was investigating any potential irregularities in the FPO and conducting a thorough investigation of the share price decline.
The market capitalization of all 10 listed Adani companies has decreased by Rs 7.5 lakh crore, or one-third, over the previous five trading sessions. After a defying rally over the past few years, shares of Adani Enterprises are now nearly 50% below their 52-week high.
The company’s stock just recently joined the Nifty. The stock, which was previously a part of the Nifty index, closed today at Rs 2,128.70, a decrease of 28.45%.
When the Adani FPO closed yesterday, it was 112% oversubscribed as money began to flow in at the last minute. Retail investor demand was only 12%, but the non-institutional investor category and qualified institutional buyers (QIB) category both experienced oversubscriptions of 3.32 times and 126%, respectively.
FPO applicants had to pay 50% upfront and the remaining amount in subsequent installments. The issue offered a discount of 64 per share to retail investors.
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