Adani slashes growth target, capex in post-Hindenburg repair moves

Billionaire Gautam Adani’s conglomerate has halved its revenue growth target and plans to hold off fresh capital expenditure (capex), according to people familiar with the matter, as the Indian tycoon seeks to rebuild investor confidence in the wake of a bruising short-seller attack. The group will now aim for revenue growth of 15 per cent to 20 per cent for at least the next financial year, down from the 40 per cent growth originally targeted, said the people. Capex plans will also be scaled down, they said, as the group prioritises bolstering its financial health over aggressive expansion.

The shift shows how the ports-to-power conglomerate is focused on conserving cash, repaying debt and retrieving pledged shares as it scrambles to undo the damage from a scathing report by Hindenburg Research on Jan 24. Even though the Adani Group denied the allegations of accounting fraud and stock manipulation levelled by the American short-seller, the scandal triggered a stock rout that has wiped about US$120 billion (S$160 billion) off the Adani empire’s market value. Holding back on investments for even as little as three months could save the conglomerate as much as US$3 billion – funds that can be deployed to pay down debt or boost the cash pile, said another person. The group’s plans are still being reviewed and are set to be finalised in the next few weeks, the people said .The retreat is a marked turnaround for Mr Adani, who has been on a rapid – and debt-fuelled – expansion spree over the past few years, and reflects the significant impact that Hindenburg’s assault has had on his conglomerate .In the days following the Hindenburg-triggered stock meltdown, Mr Adani and his companies have been working to assuage investor and lender concerns. On Feb 1, the flagship Adani Enterprises abruptly shelved the US$2.5 billion follow-on share offer – despite it being fully subscribed the day before – as the tycoon sought to avert embarrassing mark-to-market losses for his investors amid the unrelenting stock sell-off. A couple of days later, the company cancelled a retail bond sale.