Adani Group, one of the leading conglomerates of India, recently announced to gather a fund of over ₹210 billion with a combination of debt and equity. However, the ambitious announcement had the opposite effect on the stock market.
The stock rates of Adani group started declining majorly. The Adani group has been in the limelight since the Hindenburg report was published that alleged Gautam Adani, Chairman, of Adani Group, hiding his and the conglomerate’s debt and utilization of funds.
To date, Adani Group’s stock has not seen a profit and lost its value by over 53% in a span of 6 months. This announcement which was aimed to lift up the stocks happened to work otherwise and further declined the stocks again.
The announcement triggered Adani Stocks to majorly
After facing serious selling pressure earlier this Monday, the Adani groups’ fundraising announcement of ₹210 billion negatively affected the stock market. All the shares of Adani Group declined, and the Adani Total gas stock has been hit the worst.
The ambitious plan would allow the conglomerate to mobilize funds through debt and equity for its growth, promotion, and initiatives. No doubt the reputation of Gautam Adani after the Hindenburg report affected the whole group, but this plan had nothing to do with the report. However, the allegations posed by the report could be seen in the announcement yet again.
READ ALSO –India’s Adani Ports sells Myanmar port for a discounted $30 million.
The humongous debt of Adani Group is a major factor that caused the investors to lose trust
The plan was aimed to raise funds for the expansion of the conglomerate, the future plans, according to the group, need huge capital. The factors of decline include everything and anything related to Gautam Adani, the Adani group, and investors. Adani’s reputation among investors was negatively affected earlier this year and it has not recovered since then.
Also, the announcement simply mentions that the fund will be used to expand the group globally. How the funds will actually be utilized is not mentioned anywhere. So the plan falls off of transparency that triggered the investors’ risk of being involved or increased equity of the conglomerate.
On the other hand, the plan mentions of issuing debt to meet the required capital. For a group that is already in debt of over ₹2 trillion, more debt is not a wise option. Rather than be seen as an opportunity to invest, encourage new investors, and regain the lost trust, the plan was linked to the report and earlier allegations that are yet not proven. All of this combined triggered a massive loss in the stocks of the Adani group, which is already in a humongous debt.
