Adani Group shares fall drastically after ‘debt trap’ warning

Adani Wilmar stock lost 3.86 per cent intraday to Rs 663 on Wednesday against the previous close of Rs 689.60 on BSE, on Tuesday when it closed 4.73 per cent lower from the previous close of Rs 723.85 on Monday.

Its market cap fell to Rs 87,338 crore on BSE. The stock has lost 24.57 per cent till date from record high amid debt trp warning by CreditSights.

Adani Group, deeply overleveraged with numerous investments in capital-intensive businesses could land in “masive debt trap”, warned CreditSights, a Fitch Group’s debt research unit on Tuesday.

Currently, the conglomerate’s total debt is pegged at 2.3 trillion rupees ($28.80 billion). The conglomerate’s debt-funded growth plans could culminate in distress or default of its companies and impact the broader Indian economy in a “worst-case scenario”, the unit said.

Adani group debt trap warning

Shares in Adani Group companies including flagship Adani Enterprises, Adani Green Energy, Adani Ports, and Adani Power fell soon after the release of the report.

Shares of Adani Green, up about 170% in the last one year fell by 6.9%. Adani Power, which has seen five-fold increase in share price fell 5% on Tuesday.

The grim assessment comes at a time its group companies are investing in new sectors such as news media, telecom, cement and long-term infra projects.

As the interest rates are going up again, the heavy debt of the Adani companies may pose a risk due to the long gestation period of some infrastructure projects, CreditSights said in its report.

Another fact the research unit cited was “high key-man risk” in Gautam Adani’s absence as the management structure may find it inadequate to deal with.