This Multibagger Adani Stock Falls Sharply, CreditSights Calls Group 'Deeply Overleveraged': Buy?

The share price of Adani Ports and Special Economic Zone Ltd. has been falling in the last two days after Fitch Group's debt research unit CreditSights mentioned that Gautam Adani-led India's Adani Group is 'deeply overleveraged', and its many investments in capital-intensive businesses could pose long-term risks to investors, Reuters reported.

Adani Ports - NSE performance

The current market price of Adani Ports stood at Rs. 827.50/share on NSE, down by 1.05%, till last traded, on August 25. The company's share price fell by around 5% on August 23. In the last 5 days, its share price dropped by 1.56% on NSE, and in the last 1 month, its share price has surged by 10.44%. In the past 6 months, it has gained 19.15%, and in the last 1 year, its share price has fallen by 14.92%. In the long term, its share growth has been impressive, in the last 5 years, the stock increased by 109.74%.

The 52-week high level of this stock is Rs. 924.65, and the 52-week low level of this stock is Rs. 651.95.

Market capitalization	Current market price	5 Years performance	6 Months performance
Rs. 175,052 crore	Rs. 827.80	109.74%	19.15%

Why Is The Adani Ports' Share Price Falling?

As mentioned above, on Tuesday, rating agency CreditSights said, "We remain cautiously watchful of the Group's growing expansion appetite, which is largely debt-funded. We retain our existing market perform recommendations on the two Adani entities under our coverage, Adani Green Energy (AGEL) and Adani Ports and Special Economic Zone (APSEZ)." CreditSights thinks that Adani Group has elevated leverage and poor interest cover and cash outflows in almost all its entities and is at greater financial risk. But CreditSights is hopeful because of Adani Group's solid banking relationships with both domestic and international banks, which have been willing to lend the group large amounts for both its existing businesses and new ventures.

Financial results

Adani Ports and Special Economic Zone has reported a 16.09% YoY fall in consolidated net profit at Rs. 1,072.38 crore in Q1FY23, compared to Rs. 1,277.99 crore in Q1FY22. In Q1 its PAT increased by 4.72% from Rs. 1,024 crore in the earlier quarter. Adani Ports' revenue was broadly flat YoY, but gained in double-digit sequentially. In Q1FY23, its consolidated revenue grew 20.62% QoQ. Additionally, the company reported the highest ever quarterly cargo volumes in Q1FY23.

Disclaimer

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