How the Hindenburg report affected Adani Group's FY23 balance sheet
What's the story
Gautam Adani has come out swinging against Hindenburg Research. In a letter to shareholders, the billionaire called the US-based short-seller's report "targeted misinformation." Adani Group's FY23 results are testimony to its success despite the attacks that followed after the scathing report, he said in the company's annual report. Let's see how FY23 turned out for one of India's top conglomerates.
Context
Why does this story matter?
The Hindenburg report was an unexpected hit to the Adani Group. The report accused the conglomerate of brazen stock manipulation, accounting fraud, and fraudulent transactions. It stopped the high-riding group in its tracks. What followed was a massive erosion in the valuation of Adani stocks. Investor confidence in the conglomerate was at an all-time low during that time.
2022
Adani Group had a stellar 2022
The Hindenburg report came after a stellar 2022 for the Adani Group. The conglomerate's listed companies beat the expectations of analysts and investors last year. The stocks of Adani Power, Adani Wilmar, Adani Enterprises, and Adani Total Gas rallied over 200%, 179%, 125%, and 116%, respectively, in 2022. As a result, Adani was the top gainer in the world, adding more wealth than others.
2023
Group's market cap is still below Rs. 10 lakh crore
Things, however, started changing from January 24. The report claimed that Adani's empire was pulling the "largest con in corporate history." The group's combined market value fell as low as sub-Rs. 7 lakh crore. Despite showing signs of recovery, the conglomerate's market cap is still below Rs. 10 lakh crore. Adani stocks are trading up to 84% below their January levels.
FY23
The group's profit increased by 281% year-on-year
Adani Group's FY23 report shows promise. The conglomerate reported an EBITDA of Rs. 57,219 crore, up by 36% year-over-year (YoY). The group's total income grew by 96% YoY to Rs. 1,38,715 crore. Profit after tax (PAT) increased by 281% YoY to Rs. 2,473 crore. The conglomerate also announced the completion of its $2.65 billion deleveraging program.
Information
Adani Group had a strong last quarter
In the last quarter of FY23, Adani Group recorded a 26% rise in total income. The conglomerate's EBITDA grew by 157% to Rs. 3,957 crore. The group's attributable PAT saw an increase (137%) in Q4.
Conclusion
The group's balance sheet says that it is still strong
Adani Group's FY23 results do not reflect the full effects of the Hindenburg report. The annual report mostly shows the conglomerate's performance in 2022, which was incredible at the very least. However, Adani Group's performance in the last quarter says that it was business as usual for the group. The conglomerate's balance sheet tells a different story compared to the market.