Adani is back with roadshows as Hindenburg shock fades

About a dozen top group executives met prospective investors in Pune on Friday in the first of these roadshows, pitching the opportunity for “immense wealth creation" through the group’s growth. At a banquet hall in Pune’s Creaticity mall, executives led by group chief financial officer (CFO) Jugeshinder Singh and Jeet Adani, the younger son of founder Gautam Adani, narrated the story of the business steeped in energy, ports, airports and roads, and compared its performance, including growth and profitability, to companies in the fast-moving consumer goods (FMCG) sector such as Hindustan Unilever and Nestle India.

In his 13-minute opening remarks, Jeet said the group’s listed businesses clocked Ebitda of ₹71,253 crore in the first six months of FY24, more than the ₹70,000-crore-odd Ebitda of the companies comprising India’s FMCG sector, including Hindustan Unilever and Nestle, over the last four years. Ebitda stands for earnings before interest, tax, depreciation and amortization.

Jeet said the Adani companies have recorded a compounded annual growth rate of 26%, more than double that of the 11% growth posted by the FMCG companies.

“Why are we doing this? It’s not just to chase investments or (asking) you guys to participate in our portfolio," he told a group of 200 people, including fund managers, analysts and self-styled investors from Pune and Mumbai. “But mostly to tell the story from our perspective. So, when you guys relook at the platform we have created over the last three decades, you have a better sense of what it stands for and what it is evolving into."

A presentation at the event showed this was first of 26 such multi-city roadshows the group plans to make through 2024.

“What we are trying to say is that ours is a business that is more sticky than the FMCG brands and we are growing faster and that there is an immense wealth creation opportunity still there (in Adani group shares)," said Jeet.

The presentation pointed out that ₹150 invested in Adani Enterprises in November 1994 would be ₹4,88,682 as of October 2023.

“We want to tell the story of Indian infrastructure in the positive light of the strength of Indian consumers," CFO Singh said.

“All the six businesses that were incubated inside Adani Enterprises and which are independent now are unicorn cash-generating businesses. Unlike many companies in the current times which are called unicorns, upon touching a valuation of $1 billion, all the Adani businesses are generating more than $1 billion in Ebitda," he said.

PowerPoint presentations about the roadmap ahead for Adani Power and Adani Ports and Special Economic Zone were shared with investors, some of whom posed questions about the group’s proximity to the government, whether the ports business has hit a peak after taking control of 12 ports in the country, and if the conglomerate’s focus on its renewable energy business will cannibalize the business of Adani Power.

Incidentally, Adani Power and Adani Ports and Special Economic Zone are the only two group companies that have outperformed the BSE’s Sensex this year, even as investors have lost money in other group companies. Investors of Adani Power and Adani Ports and Special Economic Zone have earned 96.2% and 41.7%, respectively, between 25 January and 15 December, even as the Sensex gained 18.7% during this time.

In the run-up to the ₹20,000 crore follow-on public offer (FPO) of Adani Enterprises, group executives had met investors in at least half a dozen cities last year. But that exercise ended when on 24 January, a Hindenburg report accused the conglomerate of stock price manipulation and accounting fraud. The allegation sparked a collapse in the shares of group companies despite vigorous rebuttals by Adani, prompting the company to withdraw the FPO after it closed.

On Friday, an executive told the audience that the group has been quiet this year, referring to the Hindenburg allegations, and that all of this was a mere “distraction".

Still, not all investors who attended the roadshow were enthused.

“The presentation was a bit academic and lacked any strategic insights on the business. That is the feedback we shared post the presentation with the management," said the head of a Mumbai-based proprietary investment house.

“The presentations should be short and to the point," said another Mumbai-based high networth individual, who added that he has been an investor in Adani group companies for several years.

After the Hindenburg allegations, shares of Adani group companies continued to fall over the next three months, despite denials by the Adani group. Subsequently, the Supreme Court appointed an expert panel to investigate if the market regulator, the Securities and Exchange Board of India, failed to act on allegations of the US-based short seller against the Adani group.

The Supreme Court has reserved its order in the case, which is expected anytime soon. The markets, however seem to have discounted it, if the recent surge in Adani stocks are any indication.

In the summer of this year, the Adani group got a vote of confidence when US-based GQG Partners made one of its largest investments in an Indian company. Since then, GQG Partners, which is listed on the Australian Stock Exchange, has invested ₹21,660 crore in six Adani companies, including Adani Enterprises, Adani Power, Adani Ports and Special Economic Zone, Adani Green Energy, Adani Energy Solutions (formerly Adani Transmission) and Ambuja Cements.

The group’s attempt to woo investors comes at a time when several Mauritius-based funds continue to hold the majority of public shares in many Adani group firms.

A high networth investor who drove down from Mumbai along with his son, a chartered accountant, seemed convinced as well. Whatever they have built and the revenues are seen in the balance sheet, he said.

The last word to all this was from an organizer, who said what was presented was just the tip of the iceberg.