Adani Group Slashes Revenue Growth Target, Capex Amid Hindenburg Effect: Report

Group will now shoot for revenue growth of 15 to 20 per cent for at least the next financial year, down from the 40 per cent growth originally targeted

Adani Group's CFO Jugeshinder Singh said last month that Adani Group may dial back capital expenditure, as a follow-on share sale by Adani’s flagship firm was under way amid Hindenburg’s accusations.

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Gautam Adani-led Adani Group has halved its revenue growth target and plans to hold off fresh capital expenditure, citing people familiar with the matter told news agency Bloomberg. According to the report, Adani seeks to rebuild investor confidence in the wake of a bruising short seller attack.

Sources told Bloomberg, Adani Group will now shoot for revenue growth of 15 to 20 per cent for at least the next financial year, down from the 40 per cent growth originally targeted. Capital expenditure plans will also be scaled down, they said, as the group prioritises bolstering its financial health over aggressive expansion.

The shift shows how the ports-to-power conglomerate is focused on conserving cash, repaying debt and retrieving pledged shares as it scrambles to undo the damage from a scathing report by Hindenburg Research on January 24. Even though Adani Group denied the allegations of accounting fraud and stock manipulation levied by the American short seller, the scandal triggered a stock rout that has wiped more about $120 billion off the Adani conglomerate's market value.

Holding back on investments for even as little as three months could save the conglomerate as much as $3 billion — funds that can be deployed to pay down debt or boost the cash pile, said one of the sources.

According to sources, the group’s plans are still being reviewed and are set to be finalised in the next few weeks.

"The scale and economic inter-linkages of the Adani businesses make it relevant to discuss what any pullback in the group’s investments could entail for the economy as a whole," Barclays Plc’s analysts led by Avanti Save wrote in a February 10 report. “A disruptive outcome of the situation or a sharp pullback in the group’s investments could have implications for India’s capex cycle.”

Adani Group's Chief Financial Officer Jugeshinder Singh told a local newspaper last month that Adani Group may dial back capital expenditure, as a follow-on share sale by Adani’s flagship firm was under way amid Hindenburg’s accusations.

The retreat is a marked turnaround for a tycoon who was been on a rapid — and debt-fuelled — expansion spree over the past few years, and reflects the significant impact Hindenburg’s assault has had on the conglomerate.

The first-generation entrepreneur, who started with an agri-trading firm in 1980s, rapidly built an empire that now spans ports, airports, coal mines, power plants and utilities. In the past couple of years, it forayed into green energy, cement, media, data centres and real estate, taking on considerable leverage in a way that has spooked some credit watchers.

In the days following the Hindenburg-triggered stock meltdown, Adani and his companies have been working to assuage investor and lender concerns.

On February 1, the flagship Adani Enterprises abruptly shelved the $2.5 billion follow-on share offer — despite it being fully subscribed the day before — as the tycoon sought to avert embarrassing mark-to-market losses for his investors amid the unrelenting stock selloff. A couple of days later, the company cancelled a retail bond sale.

Adani Group plans to hire a Big Four auditor to “to carry out a general audit,” French energy giant TotalEnergies SE said in a statement earlier this month while describing its investments in India. This will help address some of the red flags raised by Hindenburg.

Adani Group has hired public relations firm Kekst CNC as its global communications adviser, Bloomberg News reported Saturday citing people familiar with the matter. Kekst, according to its website, has been involved in high-profile litigation matters, "working against some of the most aggressive counterparties."