AEL falls as promoters pledge shares, Care reduces outlook
1 min read . Updated: 09 Mar 2023, 11:14 PM IST
PremiumMumbai: The stock of Adani Enterprises Ltd (AEL), the group’s incubator, fell 4% for the first time in seven sessions on profit-booking after its promoters pledged shares valued at a likely ₹1,590 crore in group companies for the benefit of its lenders
Mumbai: The stock of Adani Enterprises Ltd (AEL), the group’s incubator, fell 4% for the first time in seven sessions on profit-booking after its promoters pledged shares valued at a likely ₹1,590 crore in group companies for the benefit of its lenders. Care Ratings revised downward the outlook on the flagship entity’s banking facilities and long-term instruments, while reaffirming its ratings, according to market analysts.
In an announcement post-market hours on Wednesday, Adani Green said it pledged 0.99% stake in the company in favour of SBICAP Trustee Co. for the benefit of its lenders, taking the total equity pledged to 2%. Similarly, Adani Transmission pledged 0.76% equity, taking its pledge to 1.32% for the benefit of AEL’s lenders.
The shares were pledged on 6 March. Based on the closing price of the stocks on the BSE on Monday it was ₹1,590 crore.
AEL ended Thursday down 4.24% to ₹1953.15, after rising 71% in six sessions from ₹1193.5 to ₹2,039.65 on Wednesday.
A day earlier, Care Ratings had revised the outlook on ₹14,933 crore of the company’s short- and long-term banking facilities to negative from stable. It, however, reaffirmed its rating at Care A+.
“Sentiments turned mildly negative after the news of the pledges in group companies after a blistering rally following news of GQG buying $1.87 billion worth of stakes from an Adani family trust," said a broker requesting anonymity.
The course for AEL’s stocks would depend on news flows, and the pledge had been used as an “excuse" to book profits after a sharp rally in AEL, said another broker.
Interestingly, the National Stock Exchange (NSE), which excluded AEL from short term surveillance measures framework on 8 March, included it again under the short-term ASM effective 9 March.
“The stocks can be excluded or included on sharp swings either side," said the broker quoted above.
The ASM framework kicks in on sharp and sudden price swings, and involves a drastic hike in margins to trade to deter the excessive speculations.
AEL, which was put under the short term ASM last month in the wake of a report by Hindenburg Research alleging fraud, saw the margin to trade more than double to 65.17%.
Apart from the stocks, Adani Green and NDTV were moved from long term ASM stage 1 to stage 2 effective 9 March, with margin to trade at 100%. Adani Wilmar and Adani Power were shortlisted for short-term surveillance measures framework effective 9 March, he added.
Shares of Adani Green and Adani Transmission remained flat at the 5% upper circuit.
Care Ratings also revised the outlook to negative from stable on debentures worth ₹2,440 crore , while re-affirming its ratings. “The negative outlook is due to expected moderation in financial flexibility of the Adani group in case of adverse outcomes or observations in the on-going regulatory and legal scrutiny directed by the Supreme Court in connection with the various allegations against Adani group companies," the agency said. “Conversely, if the outcome is satisfactory, the financial flexibility of Adani group may be restored and may lead to revision of the outlook to stable," it added.
“Furthermore, Care Ratings notes that on 2 March promoters have raised ₹15,446 crore through partial stake sale in the secondary market to GQG partners in Adani portfolio companies including sale of 3.39% stake in AEL," it said.
“Proceeds of equity are proposed to be utilized for prepayment of share backed loans at promoter levels as well as aiding liquidity of various entities of Adani group including AEL. As on 31 December 2022, aggregate fund infusion by promoters in the form of unsecured loans stood at ₹9835 crore, towards funding of capex in airports and Australia operations. These loans are expected to continue in the near term. AEL has been receiving need-based support from its promoters in case of exigencies as well as towards funding its growth capital requirements."