Art school teacher Sagar Kambli gives final touches to a painting of Indian businessman Gautam Adani (L) highlighting the continuing crisis of the Adani group in Mumbai on February 3, 2023.
Indranil Mukherjee | Afp | Getty Images
Indian billionaire Gautam Adani has downplayed the recent market volatility of Adani Group’s shares as “temporary.”
His comments got here Tuesday within the quarterly earnings release of Adani Enterprises, the flagship business of his conglomerate which spans ports, energy and media.
The tycoon said the conglomerate’s success was a results of its “strong governance” and “strict regulatory compliance.”
“The present market volatility is temporary,” Adani said. He added the conglomerate “will proceed to work with the dual objectives of moderate leverage and looking out at strategic opportunities to expand and grow.”
Shares of assorted Adani Group corporations saw a large sell-off after U.S. short-seller Hindenburg Research accused it of “brazen stock manipulation” and “accounting fraud.”
The Adani Group has denied those accusations, and said it was a “calculated attack on India.”
Adani flagship earnings
On Tuesday, Adani Enterprises reported a profit after tax of nearly $100 million for the October to December quarter. This was against a lack of $1.5 million in the identical period a 12 months ago.
Total revenue grew 42% to $3.3 billion year-on-year, on the back of stellar performance in its airports, coal trading and latest energy businesses.
No one desires to see Adani [Group] suddenly collapse because these infrastructure projects are big. The assets are good. They serve a mission critical purpose…
Anand Batepati
portfolio manager, GFM Focus Investing
“Over the past three a long time, in addition to quarter after quarter and 12 months after 12 months, Adani Enterprises has not only validated its standing as India’s most successful infrastructure incubator, but has also demonstrated a track record of constructing core infrastructure business,” said Adani in the outcomes statement.
Shares of Adani Enterprises last traded about 3% higher Wednesday on National Stock Exchange of India.
Despite the crisis, the Adani conglomerate is critical to India’s growth story, said Anand Batepati, portfolio manager at GFM Focus Investing.
“No one desires to see Adani [Group] suddenly collapse because these infrastructure projects are big. The assets are good. They serve a mission critical purpose and so they’re aligned to all these development goals the federal government is shooting for,” Batepati told CNBC’s “Streets Signs” on Wednesday.
“So, I do not think the access to [Indian] capital markets, whether it is the banks or the rupee bond market, goes to be closed to Adani,” added Batepati. “It is feasible though that there is going to be more scrutiny.”
Not a ‘Lehman moment’
The Securities and Exchange Board of India is predicted to fulfill Finance Minister Nirmala Sitharaman on Wednesday, to offer an update on its investigations into the Adani Group, Reuters reported, citing sources.
India’s central bank, the Reserve Bank of India, has also said “the banking sector stays resilient and stable,” citing its own assessment of the situation. The RBI said it’ll proceed to watch the soundness of the industry.
Batepati said the Adani crisis is unlikely to have the identical fallout because the collapse of U.S. investment bank Lehman Brothers in 2008, which triggered a string of huge Wall Street bailouts and a subsequent financial crisis.
“The Reserve Bank of India recently asked everybody to furnish their exposure to the Adani Group in light of the recent developments. It was a reasonably small number… that reported back,” said Batepati.
While he acknowledged the true extent of the exposure to the Adani Group could possibly be possibly larger, at the least, “at face value, these numbers are quite small and it isn’t like you are going have a Lehman moment due to Adani.”
