Is Aswath Damodaran right about Adani Enterprises valuation? Here’s what Basant Maheshwari says
1 min read . Updated: 07 Feb 2023, 11:26 AM IST
PremiumAdani Enterprises ‘yields a value of just about ₹947 per share,’ Aswath Damodaran earlier said.
Financial adviser Basant Maheshwari, while calling Aswath Damodaran a renowned investor, has said that the latter’s problem is that he converts everything to MS Excel. However, the share market doesn’t follow Excel calculations. It rather runs on sentiments, said Maheshwari.
Maheshwari was referring to Aswath Damodaran’s valuation of Adani shares. Damodaran earlier said that the share price of Adani Enterprises was over stretched when it was valued at $53 billion. The stock "with upbeat assumptions on revenue growth and operating margins, and without factoring any of the Hindenburg accusations of fraud and malfeasance, yields a value of just about ₹947 per share", said Damodaran who is celebrated for his valuation accuracy.
Maheshwari, too, spoke about Damodaran’s accuracy of valuation. He referred to US-based Peloton, which was much in demand during the lockdown when people used to buy a lot of sports equipment. Its share was around $28 when Damodaran predicted that it would come down to $19, and it did happen, said Maheshwari.
Also Read: Aswath Damodaran values Adani Enterprises stock at ₹947 per share
Maheshwari recalled when Damodaran was right about Zomato. During the launch of its IPO, the cost was around ₹150. Damodaran said the actual value of the stock was ₹41. He was accurate that time as well, Maheshwari added.
However, Basant Maheshwari believes that Aswath Damodaran’s predictions are correct during a bear market. In a bull market, Damodaran’s predictions are often wrong, he said. Damodaran’s data doesn’t involve market sentiments, Maheshwari added.
“If it’s a deeply bear market, he’d be right. He’d be wrong if it’s a bull market," Maheshwari said.
Meanwhile, according to a study released on February 7 by CreditSights, a part of Fitch Ratings, SBI's whole loan exposure to the Adani Group is very manageable given its sizeable general provision reserves buffer of ₹338 billion or 1% of net loans.
Also Read: SBI's loan exposure to Adani Group: CreditSights report says 'don't see an issue'
According to SBI Chairman Dinesh Kumar Khara, the bank's overall exposure to the group was 0.9% of its total loan book, or roughly 270 billion rupees.
“Do not see loan exposure to Adani Group as an issue for the State Bank of India (SBI) given its strong general provision reserves buffer," CreditSights’ note stated.
