Adani Group cos feel the heat of NDA’s poor show in polls

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Adani group company stocks have been hammered amid the crash in the equity markets after the ruling NDA failed to live up to its own expectations of winning in 400 constituencies. Even though the BJP-led NDA will form the government in Centre for the third time in a row, it has to get the consent of alliance partners for pushing in reforms.

The market capitalisation of all the 10 Adani company stocks fell by about ₹3-lakh crore from ₹19.65-lakh crore logged last Monday.

Adani Ports crashed 21 per cent and plunged to ₹1,248 while Ambuja Cements, Adani Enterprises, Adani Energy Solutions, Adani Green, NDTV, ACC, Adani Total Gas and Adani Gas fell in between 18 per cent and 12 per cent each. Adani Wilmar was down 10 per cent to ₹332 as investors booked profit.

‘Big bubble’

Amit Goel, Co-Founder & Chief Global Strategist, Pace 360 said Adani group firms rallied on Monday, adding almost $20 billion to the group’s market value, as exit polls strongly signalled a decisive victory for Prime Minister Narendra Modi’s party in the general elections. Against expectations for a huge surge, Adani group company stocks have been hammered as the ruling party has suffered a setback, he said. “We see the Indian equities as the biggest bubble ever made in the history of world equity markets. Indian valuations are expensive for ordinary corporate earnings growth. We believe Indian markets are extremely over-valued and do not represent a great buying opportunity,” he said.

Interestingly, stocks of the Gautam Adani-led Group gained ₹1.4-lakh crore in market-cap on Monday after prediction of run-away victory for the incumbent Modi government. Following the rally, Adani stocks had also erased all Hindenburg-era losses with its market capitalisation nearing the ₹20-lakh crore-mark after a gap of 16 months.

In FY24, Adani group companies’ net profit jumped 55 per cent to ₹30,768 crore, while its EBITDA grew 40 per cent year-on-year to ₹66,000 crore.

The group’s net debt at the group level remained stable at ₹2.2-lakh crore in FY24 against ₹2.3-lakh crore in FY23. Adani Ports and Adani Power saw a drop in net debt in FY24. An increase in leverage for Adani Enterprises and Adani Green was on the back of new capex projects undertaken by companies, said Jefferies in its report.