Adani cuts growth target in post-Hindenburg repair moves

Bloomberg

Gautam Adani’s conglomerate has halved its revenue growth target and plans to hold off fresh capital expenditure, according to people familiar with the
matter, as the Indian billionaire seeks to rebuild investor confidence in the wake of a bruising short seller attack.
The group will now aim for revenue growth of 15% to 20% for at least the next financial year, down from the 40% expansion originally targeted, said the people, who didn’t want to be named as the discussions are private.
Capital expenditure plans will also be scaled down, they said, as the group prioritises bolstering its financial health over aggressive expansion.
All 10 stocks in the group dropped on Monday, with the flagship Adani Enterprises Ltd sliding as much as 10%. Adani Green Energy Ltd, Adani Total Gas Ltd, and Adani Transmission Ltd were each down by the 5% limit.
The shift in policy shows how the ports-to-power conglomerate is focussed on conserving cash, repaying debt and retrieving pledged shares as it scrambles to undo the damage from a scathing report by Hindenburg Research. Even though Adani Group denied the allegations of accounting fraud and stock manipulation levied by the American short seller, the report triggered a stock rout that has wiped more than $120 billion off the Adani empire’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 another person.
The group’s plans are still being reviewed and are set to be finalised in the next few weeks, the people said.
An Adani Group representative didn’t immediately respond to an email seeking comments on its plan to slash revenue target and delay capital expenditure. “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 report. “A disruptive outcome of the situation or a sharp pullback in the group’s investments could have implications for India’s capex cycle.”
Chief Financial Officer Jugeshinder Singh told a newspaper that the 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.
If the follow-on offer failed to get subscribed, “we will postpone the growth program for six to nine months and then do it later,” Singh told The Hindu Businessline in an interview earlier. The sale was scrapped three days later, amid pressure from investors.
In the days following the Hindenburg-triggered stock meltdown, Adani and his companies have been working to assuage investor and lender concerns.