- Indian billionaire Gautam Adani has downplayed recent market volatility in Adani Group shares as “temporary”.
- His comments came in Tuesday’s quarterly earnings release from Adani Enterprises, the flagship of its conglomerate, which includes ports, energy and media.
- “Current market volatility is temporary,” Adani said, adding, “The conglomerate will continue to operate with the twin objectives of moderate leverage and seeking strategic opportunities to expand and grow.”
Art school teacher Sagar Kambli puts the finishing touches to a painting by Indian businessman Gautam Adani (L) highlighting the ongoing crisis at the Adani group in Mumbai February 3, 2023.
Indranil Mukherjee | AFP | Getty Images
Indian billionaire Gautam Adani has downplayed recent market volatility in Adani Group shares as “temporary”.
His comments came in Tuesday’s Adani Enterprises quarterly earnings release, the flagship of its conglomerate, which includes ports, energy and media.
The tycoon said the conglomerate’s success was a result of its “strong governance” and “strict compliance with legal regulations.”
“The current market volatility is temporary,” Adani said. He added that the conglomerate “will continue to operate with the twin objectives of moderate leverage and seeking strategic opportunities to expand and grow.”
Shares of various companies in the Adani group saw a massive sell-off after US short seller Hindenburg Research accused it of “brazen stock manipulation” and “accounting fraud”.
The Adani group has denied these allegations, saying it was a “calculated attack on India”.
On Tuesday, Adani Enterprises reported nearly $100 million in after-tax earnings for the October-December quarter. This compares to a loss of $1.5 million in the same period a year ago.
Total revenue increased 42% year over year to $3.3 billion, driven by excellent performance in airports, coal trading and new energy sectors.
Nobody wants to see Adani [Group] suddenly collapse because these infrastructure projects are big. The fortune is good. They serve a mission-critical purpose…
Anand Batepati
Portfolio Manager, GFM Focus Investing
“Over the past three decades, quarter after quarter and year after year, Adani Enterprises has not only confirmed its position as India’s most successful infrastructure incubator, but also demonstrated a track record of building the core infrastructure business,” Adani said in the earnings statement.
Adani Enterprises shares were last trading about 3% higher on the National Stock Exchange of India on Wednesday.
Despite the crisis, the Adani conglomerate is vital to India’s growth story, said Anand Batepati, portfolio manager at GFM Focus Investing.
“Nobody wants to see Adani [Group] suddenly collapse because these infrastructure projects are big. The fortune is good. They serve a mission-critical purpose and align with all of these development goals that the government is pursuing,” Batepati told CNBC’s Streets Signs on Wednesday.
“Well, I don’t think access to [Indian] The capital markets, be it the banks or the rupee bond market, will remain closed to Adani,” Batepati added. “However, it is possible that there will be further investigations.”
The Securities and Exchange Board of India is expected to meet Finance Minister Nirmala Sitharaman on Wednesday to update on its investigation into the Adani group, Portal reported, citing sources.
India’s central bank, the Reserve Bank of India, also said that “the banking sector remains resilient and stable,” citing its own assessment of the situation. The RBI said it will continue to monitor the stability of the industry.
Batepati said the Adani crisis is unlikely to have the same fallout as the 2008 collapse of US investment bank Lehman Brothers, which sparked a series of major Wall Street bailouts and a subsequent financial crisis.
“The Reserve Bank of India recently asked everyone to declare their exposure to the Adani Group in light of recent developments. It was a fairly small number… that came forward,” Batepati said.
While he acknowledged that the true scale of involvement in the Adani group could potentially be greater, at least “for the face value, these numbers are pretty small and it’s not like you’re having a Lehman moment because of Adani.”