The analyst who kicked off scrutiny of Adani Group’s finances nearly a year ago by
terming the conglomerate “deeply overleveraged” has upgraded his view, saying some of
the Indian billionaire’s firms now have better metrics.

Adani Enterprises Ltd., Adani Power Ltd. and Adani Ports & Special EconomicZone Ltd.

have moderate leverage, Lakshmanan R, senior research analyst
at CreditSights, told Bloomberg in an email. For Adani Green Energy Ltd.
and Adani Transmission Ltd. leverage is still high, he said.

“We have observed an improvement in credit metrics for a majority of the Adani Group
companies in FY23 versus FY22, while a couple of them have managed to keep their
credit metrics stable or seen only a modest deterioration,” the analyst at the Fitch

He stressed that the CreditSights figures for Adani were still “materially weaker” than
those the company itself reported, due to different methodologies.

The fresh assessment comes just hours after the conglomerate published a report saying
its net debt to earnings before interest, tax, depreciation and amortization had improved
to 3.27 times at the end of March compared with 3.81 times the year before.

Nearly 18% of its gross debt is reserved in the form of cash for liquidity cover, and
both domestic and international banks continue to show confidence by disbursing new
debt and rolling over existing lines, according to Adani’s report, dated June 6.

Shares of 10 companies related to the group were mixed in afternoon trading in
Mumbai on Tuesday. Cement firms Ambuja Cements Ltd. and ACC Ltd. were
among gainers.

As for the group’s dollar bonds, 11 of the 15 outstanding climbed, according to data
compiled by Bloomberg.
Scrutiny of the conglomerate’s finances intensified in January after US short seller
Hindenburg Research accused it of inflating revenues and manipulating stock prices.
Adani has repeatedly denied both Hindenburg’s allegations and the assessment by
CreditSights.

Indian companies typically treat April to March as a financial year for corporate
disclosures such as earnings

Despite the improving debt metrics, Lakshmanan R said risks remained.

We are also wary of the Group’s lingering corporate governance headwinds,” he said.
The research firm also sees “some execution risks to the Group’s external fundraising
plans that could pose debt refinancing risks for select upcoming debt maturities.”

About four months after US short-seller Hindenburg Research shook Indian financial
markets with a bombshell report on the Adani Group, the conglomerate’s stocks are
finding it hard to shake off the impact

While two of Adani’s 10 stocks have bounced back strongly, a full recovery to preHindenburg levels looks a ways away. The group’s market value is still down more
than $100 billion since Hindenburg’s Jan. 24 report, which claimed that billionaire
Gautam Adani’s empire was “pulling the largest con in corporate history.” The rout had
reached $153 billion at one point.
“Adani stocks have seen a readjustment of their valuations. The froth that existed prior
to Hindenburg has gone away and won’t come back,” said Abhay Agarwal, founder
and fund manager at Mumbai-based investment firm Piper Serica Advisors Ltd. “While
investors are less concerned about governance issues at the group now than they were
in the aftermath of the Hindenburg report, it is unlikely to erase all the losses over the
next three, six or even 12 months.

Overall, the median decline in 10 Adani stocks over a period of about four months
stands at 23%. That’s more than a 19% median loss over a similar stretch for shares of
some other key companies targeted by Hindenburg since 2020, including Adani.

The Indian group has been one of the most high-profile targets for Nathan Anderson’s
company, which has had a run of often-successful bets from electric-vehicle maker
Nikola Corp. and Icahn Enterprises LP

The short seller’s attack has left the group reassessing its grand ambitions after it
racked up one of India’s heftiest debt loads to fund fresh areas of growth. Adani —
who has been closely associated with Prime Minister Narendra Modi’s nation-building
efforts and has seen his conglomerate witness explosive growth since the leader came
into power — is dialing back on ambitions to dive further into aluminum, steel and
road projects, Bloomberg News reported in March, citing people familiar with the
group’s inner workings.
Adani has vigorously denied Hindenburg’s allegations and maintained it is fully
compliant with disclosures required under local laws. The group didn’t respond to an
email seeking comments for this story. Hindenburg also didn’t reply to emailed
requests for comment by Bloomberg News.

Much of the Adani stocks’ revival can be attributed to a strong backing by star
emerging-market investor Rajiv Jain, who serves as chief investment officer at GQG
Partners LLC. The firm helped stem the rout when it bought shares in four Adani units
from a family trust, and has added to its holdings further. Sentiment also got a lift after
a panel appointed by India’s top court said it found no regulatory failure or signs of
price manipulation in Adani stocks.
On their part, the tycoon, his family and firms have been prepaying some debt, buying
back some bonds and holding investor roadshows in a bid to restore confidence. In a
report Monday, the group said its key debt metrics have improved.

Leading the rebound in the equity market are cash-generating businesses that have some
of Adani group’s most lucrative assets. Adani Ports & Special Economic Zone Ltd. —
touted by market watchers as the conglomerate’s crown jewel — in late May became the
first group stock to briefly erase all the losses since Hindenburg’s attack. All 21 sell-side
analysts tracked by Bloomberg have a buy rating on the stock.
Adani Power Ltd. jumped as much as 7.1% on Wednesday, reclaiming levels seen

before the short seller report. The company — India’s largest private coal-based energy
producer — saw its profit more than double in the year ended March.
Most Adani stocks were higher in early trading after Indian exchanges announced an
increase in daily price bands for four of the group’s securities as part of a broader
review. The limit for Adani Power was raised to 20% from 5%.
Down about 80% since Jan. 24, Adani Total Gas Ltd. has borne the brunt of the selloff
in Adani shares. Flagship Adani Enterprises Ltd. is about 30% below its preHindenburg level. On the debt side, Adani Ports’ note due in July 2024 is the only one
among the group’s 15 dollar bonds to have recouped all losses, albeit briefly.
In its report, Hindenburg said it had taken a short position in Adani Group
companies through US-traded bonds and non-Indian-traded derivative instruments.
After campaigning against Adani, the short seller has bet against Jack Dorsey-led
Block Inc. and Icahn Enterprises, which has billionaire Carl Icahn as its chairman.
Shares of the latter plummeted 20% after Anderson’s firm took a short position — with
losses extending to 56% as of June 2 close.

India’s broader stock market, meanwhile, seems to have put the Adani-Hindenburg
saga behind. The benchmark NSE Nifty 50 Index has rallied over 7% this quarter and
is close to surpassing an all-time high reached in early December.
Investors in Adani stocks are awaiting the findings of a probe by India’s markets
regulator into Hindenburg’s claims. The nation’s top court has asked for the
investigation to be closed by Aug. 14. The regulator is also proposing to seek more
disclosures from foreign funds with large holdings in local stocks or companies,
following criticism about lack of oversight over inflows into sprawling conglomerates
such as the Adani Group.
For now, investments from Jain of GQG Partners appear to be a key catalyst for Adani
stocks. He said last week that GQG values Adani-related holdings at about $3.5 billion
after a recovery in share prices from post-Hindenburg lows.
“We are certainly interested in investing further in Adani,” GQG Partners’ Jain told
Bloomberg News in an interview last week. “But it depends on a lot of things,
including pricing. Nothing is written on stone.