The recent market volatility of shares of the Adani Group has been downplayed by Indian billionaire Gautam Adani as “temporary.”
His remarks were made on Tuesday in the Adani Enterprises quarterly financial report. Adani Enterprises is the flagship company of his conglomerate, which also includes media, energy, and ports.
The tycoon said that the conglomerate’s “tight governance” and “strict regulatory compliance” were responsible for its success.
Adani claimed that the current market turmoil was only temporary. The group, he continued, “will continue to work with the twin aim of moderating leverage and looking at strategic chances to grow.”
After allegations of “brazen stock manipulation” and “accounting fraud” made by US short-seller Hindenburg Research, shares of several Adani Group firms experienced a significant sell-off.
These allegations have been refuted by the Adani Group, which further said it was a “planned attack on India.”
Adani’s Top Line Revenue
Adani Enterprises recorded a profit after tax for the three months ending in October and December on Tuesday of around $100 million. As opposed to a loss of $1.5 million during the same period last year.
Due to outstanding results in its airports, coal trading, and new energy divisions, total revenue increased 42% to $3.3 billion from the previous year.
Because these infrastructure projects are so large, nobody wants to see Adani [Group] abruptly fail. The equipment is good. They provide an essential function…
GFM Focus Investing portfolio manager Anand Batepati
Adani Enterprises has validated its position as India’s most successful infrastructure incubator over the past three decades, as well as quarter after quarter and year after year, and has also shown a track record of developing core infrastructure businesses, according to Adani in the results statement.
The last time Adani Enterprises shares traded on the National Stock Exchange of India, they were up nearly 3%.
According to Anand Batepati, portfolio manager at GFM Focus Investment, the Adani conglomerate remains crucial to India’s economic story despite the crisis.
“Nobody wants to see Adani [Group] suddenly collapse because these infrastructure projects are big, the assets are good, they serve a mission-critical function, and they’re aligned to all these development goals the government is shooting for,” Batepati said on Wednesday’s episode of CNBC’s “Streets Signs.”
Thus, I don’t think Adani’s access to [Indian] capital markets will be restricted, whether it is through banks or the rupee bond market, continued Batepati. Yet, it’s probable that there will be increased monitoring.
There was no “Lehman moment”
According to sources cited by Reuters, the Securities and Exchange Board of India is scheduled to meet with Finance Minister Nirmala Sitharaman on Wednesday to provide an update on its inquiries into the Adani Group.
The Reserve Bank of India, the country’s central bank, also stated, using its own evaluation of the situation, that “the banking industry is resilient and stable.” The RBI declared that it will keep an eye on the sector’s stability.
According to Batepati, the Adani problem is not likely to have the same effects as the 2008 financial crisis that resulted from the bankruptcy of the American investment bank Lehman Brothers, which prompted a number of significant Wall Street bailouts.
It was a relatively small number that responded when the Reserve Bank of India recently asked everyone to provide their exposure to the Adani Group in light of recent developments, according to Batepati.
At the very least, “at face value, these figures are relatively minor and it’s not like you’re going to have a Lehman moment because of Adani,” he said, acknowledging that the true scale of the exposure to the Adani Group may be potentially greater.