Adani Group Vows To Reduce Leverage, Flagship Swings Back To Profit

Gautam Adani’s flagship firm swung to a profit and pledged to lower leverage as the billionaire tries to win back investor confidence after a bruising report from short-seller Hindenburg Research wiped out more than $120 billion of his empire’s market value. Adani Enterprises (AEL) on Tuesday reported a consolidated net profit of Rs 820.06 crore in third quarter of the current financial year compared to a loss of Rs 11.63 crore in the same period a year back, according to a stock exchange filing by the company.

“The current market volatility is temporary,” AEL Chairman Gautam Adani said in the earnings statement. “As a classical incubator with a vision of long-term value creation, Adani Enterprises will continue to work with the twin objectives of moderate leverage and looking at strategic opportunities to expand and grow.”

The firm has appointed accountancy firm Grant Thornton for independent audits of some of its companies in a bid to discredit claims by Hindenburg that have battered its stocks and bonds, two sources told Reuters. One of the sources added that Grant Thornton would look at whether related-party transactions at the Adani group complied with corporate governance standards.

The group on Tuesday also said its companies face no material refinancing risk, or near-term liquidity issues and have made no “material financial adjustments” owing to the allegations. In a long-awaited credit report issued by Adani to Indian exchanges on Tuesday, the apples-to-airports group said there was “no material refinancing risk and near-term liquidity requirement as there is no near-term significant debt maturity”.

AEL’s revenue surged 42 per cent to Rs 26,612.33 crore. Its so-called integrated resource management — the biggest contributor to top-line and profits — saw a 370 per cent jump in pre-tax profit to Rs 669 crore. Profit from mining and new energy tripled. The airports business saw revenues doubling but profitability rising by 29 per cent. Total costs climbed 37 per cent to Rs 26,171.18 crore.

The group has been under pressure since the Hindenburg report that accused it of accounting fraud and stock manipulation, allegations that the conglomerate has denied as “malicious”, “baseless” and a “calculated attack on India”.

Adani said the group’s fundamental strength lies in mega-scale infrastructure project execution capabilities, and organisational development comparable to the best in the world.

“AEL’s exceptional resilience and capacity to build highly profitable core sector business indicate how our strategy of harnessing the diverse strengths of the Adani portfolio of companies is creating consistent long-term value for all our stakeholders,” he said.

“Our success is due to our strong governance, strict regulatory compliance, sustained performance, and solid cash flow generation.” AEL, which incubates new Adani businesses and its current mix spans coal mining, airports, data centres, digital services and metals, had withdrawn a fully-subscribed Rs 20,000-crore share sale as its stock plunged after the Hindenburg report.

“In order to protect the interest of the bidders amid volatile market conditions, the board of directors of the parent company decided not to proceed with the FPO and withdrew the red herring prospectus. Accordingly, the entire application bid amounts have been released to the bidders,” the filing said.

Earnings before interest, taxes, depreciation, and amortisation doubled to Rs 1,968 crore in the third quarter.