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Adani Group's Meteoric Rise Reversed, Rs 10 Lakh Crore Wiped Out

Investor Profit-Taking Triggers Massive Sell-Off in Adani Group, Market Cap Dives

5 June 2024

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Neelesh Bachani

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1. On June 4, Adani Group stocks plummeted by up to 18%, wiping out over Rs 10 lakh crore from its market capitalization, reversing gains from the previous trading session.

 

2.  Key companies such as Adani Total Gas, Adani Energy Solutions, and Adani Power saw declines of 18%, 12%, and 10% respectively, with broad impacts across other group companies like Adani Green Energy, Adani Enterprises, Ambuja Cement, and NDTV.

 

3. Despite a robust financial performance in FY24 with a 40% YoY increase in EBITDA to Rs 66,000 crore, investor profit-taking and risk reduction led to a significant market correction

The Adani Group experienced a significant setback as its stocks plummeted by 18% on June 4, leading to a massive decrease in the group's market capitalization. This sudden decline followed a period of gains in recent trading sessions. The sharp drop in stock prices has been attributed to investors unwinding their speculative positions, likely to lock in profits or reduce their exposure to market risks. This correction erased over Rs 10 lakh crore from the conglomerate's market value.

 

Before this downturn, Adani Group's stocks had surged significantly in the previous trading session, adding Rs 1.4 lakh crore to its market capitalization. This increase brought the total market worth of the group's listed companies to nearly Rs 20 lakh crore. The group's strong performance had been driven by robust earnings results for the fiscal year ending March 2024, which had fueled investor confidence and contributed to the recent surge in stock prices.

 

Among the Adani Group companies, Adani Total Gas suffered the most considerable loss during the morning trading on June 4, with its stock dropping nearly 18%. Adani Energy Solutions also faced a substantial decline, falling by 12%. Similarly, Adani Power experienced a significant drop of over 10%, reflecting the trend of declining stock prices across the conglomerate's portfolio.

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Adani Green Energy and Adani Enterprises both saw their stock prices fall by 7%, adding to the overall negative sentiment surrounding the group. Adani Ports and SEZ witnessed an 8% decline, while Adani Wilmar's stock dropped by 8.5%. These declines were part of a broader market correction affecting the entire Adani Group, which had previously been buoyed by positive earnings reports.

 

Ambuja Cement and ACC, both part of the Adani conglomerate, experienced declines of 9.6% and 9%, respectively. NDTV, another entity under the group's umbrella, saw its stock plummet by 12%. The widespread nature of the declines across different sectors within the group underscores the extent of the market correction and the impact of investors' actions to mitigate risk.

 

The recent surge in Adani Group's stock prices had been underpinned by a strong earnings performance for the fiscal year ending March 2024. The group's EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) had increased by 40% year-over-year to Rs 66,000 crore. This robust financial performance had initially boosted investor confidence and driven the upward momentum in stock prices, which has now been sharply reversed by the latest market correction.

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