Adani Group of companies is one of the largest conglomerate companies in India. The shares of Adani Group was performing well for the past 2-3 years. However, Creditsights, a financial research firm says that “Adani Group Deeply Overleveraged”. Let’s discuss this in detail.
GOUTAM ADANI – A Conglomerate!
Goutam Adani is an Indian Billionaire and industrialist who runs multiple business firms across many industries. Moreover, running multiple businesses across many industries is termed as Conglomerate. Adani’s business is always competitive with the giant Reliance industries owned by Mukesh Ambani. Moreover, people tend to buy more shares of Adani group, Ambani Group, and Tata group,etc. because of their huge presence.
The below are the Adani group listed companies
- Adani Enterprises
- Adani Ports & SEZ
- Adani Wilmar
- Adani Green
- Adani Total Gas
- Adani Transmission
- Adani Power
WHAT DOES DEEPLY OVERLEVERAGED MEAN?
Deeply Overleveraged is nothing but the company is getting more into debt. Moreover, this means that the company has more debts than the expected or average debt in the industry. But, people always tend to select debt-free or low-debt stocks for good returns. Also, it gives the investor a hope that the company is performing well in all aspects.
CREDITSIGHTS VIEW
CreditSights is a financial research firm that conducted fundamental analysis and they reported as follows. Moreover, CreditSights is sometimes referred to as Fitch ratings which is nothing but its Parent name.
“The largest Conglomerate Adani group has expanded its business venture to a greater extent. However, It has high Debt Funding. We remain cautiously watchful for the same.” CreditSights Reported.
Link to CreditSights: https://t.co/4lpnCFaY7R
It added, “Many Group companies need to reduce deep leverage which requires equity capital involvement. Despite its large promoter net-worth, it is difficult to predict the support for liquidity continuously”
Although they have large debts, there is space for pledging the promoter holdings which can help to mitigate the debt issue.
Finally, CreditSights concluded that it is “Cautiously Watchful”
THE AFTERMATH! ADANI POWER LOWER CIRCUIT 😨
As a result of CreditSight’s caution, the Adani group of stocks started to fall. Moreover, Adani Power hits Lower Circuit (LC) today. Below are the screenshots which show the stock performance on Aug 23, 2022 ~02:15PM IST
TO WRAP THINGS UP!
Choosing a conglomerate for investing is a great idea. However, the right time to invest matters. It depends on cyclical, Events, Reports, etc. Finally, choosing a stock that is free from debt or low debt with strong other fundamental factors is a wise move. Read about Quantitative, Qualitative, and Technical analysis of stocks.
Are you holding any Adani group stocks? Let me know in the comments section!
