Adani Group crisis updates: Adani Ports shares rebound from 52-week low amid strong after-effects of Hindenburg report

Amid concerns over banks' exposure to the embattled Adani Group, the Reserve Bank on Friday said India's banking sector is resilient and stable, and the central bank maintains constant vigil on the lenders. 

Responding to media reports expressing concern about the exposure of Indian banks to a "business conglomerate", the Reserve Bank said in a statement that it is constantly monitoring the banking sector. 

However, the RBI did not name the Adani Group. 

As per the current assessment, the RBI said, "the banking sector remains resilient and stable. Various parameters relating to capital adequacy, asset quality, liquidity, provision coverage and profitability are healthy." 

"As the regulator and supervisor, the RBI maintains a constant vigil on the banking sector and on individual banks with a view to maintain financial stability. The RBI has a Central Repository of Information on Large Credits (CRILC) database system where the banks report their exposure of Rs 5 crore and above which is used for monitoring purposes," the central bank said. 

The RBI, the statement said, remains vigilant and continues to monitor the stability of the Indian banking sector. 

It further said that banks are also in compliance with the Large Exposure Framework (LEF) guidelines issued by the RBI.

He said, "I do not know if they will approach the MEA. I am not aware of any such outreach at all. I do not think it is a foreign policy issue. If there is any query that they might have vis-a-vis a private organisation, maybe they will route it through other concerned departments concerned department. I am not aware...I do not think we have been approached by any government." 

Shareholders and customers of state-run Life Insurance Corp (LIC) should not be concerned about its exposure to the Adani group, as the insurer is a diversified long-term investor, a top government official told Reuters.

LIC "has put out the information that their exposure in Adani Group companies should not be any concern for shareholders and policyholders," Department of Investment and Public Asset Management secretary Tuhin Kanta Pandey said.

"LIC has a well diversified portfolio and has its investments in many companies and the value of its investments keeps changing. LIC is a long term investor in the market."

LIC holds a 4.23% stake in the flagship Adani firm, while its other exposures include a 9.14% stake in Adani Ports and 5.96% in Adani Total Gas.

Both houses of India's parliament were adjourned on Friday amid chaotic scenes as some lawmakers demanded an inquiry following the meltdown of shares in billionaire Gautam Adani's group companies, which some fear could spark wider financial turmoil.

Shares in Adani group companies have lost about half their market value - or more than $100 billion combined - since US short-seller Hindenburg Research last week accused the group of stock manipulation and unsustainable debt.

The Adani group rejects the criticism and denies wrongdoing.

A Public Interest Litigation (PIL) was filed in India's top court against Hindenberg, the US short-seller that accused Adani Group's companies of corporate fraud.

The litigator has urged Supreme Court to prosecute Hindenberg for exploiting and duping lakhs of "innocent" investors and to prosecute them.

Adani Enterprises recovered 38.81 per cent to hit a high of Rs 1,661 on Friday. 

However, Adani Green Energy was down 10 per cent and Adani Transmission scrip also remained stuck at 10 per cent on Friday.

Adani Ports shares recovered nearly 25 per cent on Bombay Stock Exchange as trading approached its end on Friday evening. Adani Ports stocks gained after two days of consecutive fall. 

Fitch Ratings on Friday said that there is no immediate impact on the ratings of the Fitch-rated Adani firms following a short-seller report that alleged malpractices at India’s Adani group. The Fitch Ratings said that it expects no material changes to group's forecast cash flow. 

Moody’s on February 3 said that its ratings for Adani Ports and Special Economic Zone Limited, Adani Green Energy Limited, and Adani Transmission Limited are based on their infrastructure businesses with long-term sales contracts, or their strong operating cash flows and dominant market position.

"Given the significant and rapid decline in the market equity values of the Adani Group companies following the recent release of a short-seller report highlighting governance concerns, our immediate focus is primarily on assessing the rated entities’ overall financial flexibility, including their liquidity position and access to funding to support refinancing and ongoing growth initiatives," the ratings agency said.

"Nevertheless, these adverse developments are likely to reduce the group’s ability to raise capital to fund committed capex or refinance maturing debt over the next 1-2 years. We recognise that a portion of the capex is deferrable, and the rated entities do not have significant maturing debt until FY2025," it added.

(With inputs from agencies)

In New Delhi, both houses of India's parliament were adjourned on Friday after Opposition leaders raised demands for a probe either by a Joint Parliamentary Committee (JPC) or by a top Supreme Court judge-designated committee into the allegations against the Adani Group in the Hindenburg Research report. 

"Keeping public interest in mind, we want a thorough probe into the Adani issue either by a Joint Parliamentary Committee or a Supreme Court-monitored panel," opposition leader Mallikarjun Kharge said. "There should also be day-to-day reporting of the investigation on the issue."

The Lok Sabha or the House of People and Rajya Sabha or the House of States, will convene at 11 am on February 6.

Adani Group's listed units' combined market capitalisation has collapsed by more than $100 billion since US short-seller Hindenburg Research released a report against group's market practices. The report was rubbished by the Adani Group in a 413-page response that was released shortly after. 

The stock prices of Adani Ports, India's largest port service provider, continued their downward trend on Friday and opened 10 per cent lower earlier in the day. The company was pushed out of 50 most valued Indian companies as its market capitalisation slipped to Rs 87,375 crore ($1.062 billion). The shares of Adani Ports have decreased by 58 per cent from its 52-week high at Rs 987.90 in September 2022.

Adani Enterprises shares fell 20 per cent as the markets opened. 

After a "media & stakeholder analysis", Adani Group's flagship company Adani Enterprises has been removed from the Dow Jones Sustainability Indices. The removal will go in effect starting February 7. Analysts say that this makes the shares less appealing to sustainability-minded funds. 

Adani Group entities made scheduled coupon payments on outstanding U.S. dollar-denominated bonds on Thursday, a bondholder and a source with direct knowledge of the Indian conglomerate's strategy was quoted as saying by Reuters.

Billionaire Gautam Adani is reportedly in talks with creditors to prepay some loans in a bid to restore confidence in his business empire, Bloomberg reported. The Group's dollar bonds continued to rally on Friday.