Markets: Adani Group stocks plummeted up to 18 percent on June 4, following substantial gains in recent trading sessions.

This sudden drop is attributed to the unwinding of speculative positions as investors take profits or reduce their exposure. The sharp correction led to a market capitalization erosion of over Rs 2.3 lakh crore for the Adani Group.

In the previous session, the conglomerate’s stocks surged, adding Rs 1.4 lakh crore to their value and bringing the total market value of the group’s listed entities to nearly Rs 20 lakh crore.

In early trading, Adani Total Gas was the hardest hit, falling nearly 18 percent. Adani Energy Solutions dropped 12 percent, Adani Power fell over 10 percent, Adani Green Energy decreased by 7 percent, and Adani Enterprises also declined by 7 percent. Adani Ports and SEZ fell 8 percent, Adani Wilmar dropped 8.5 percent, Ambuja Cement slipped 9.6 percent, ACC declined 9 percent, and NDTV was down 12 percent.

The Adani Group had been on a stellar run following strong earnings for the fiscal year ending March 2024, with EBITDA surging 40 percent year-on-year to Rs 66,000 crore.

The group’s market cap had been impacted by the Hindenburg report in late FY23, but FY24 saw a focus on reducing debt and lowering the founders’ share pledge. Total group EBITDA grew 40 percent YoY in FY24, and the group raised fresh funds and increased promoter stakes, leading to a market cap rebound.

“The group is back on an expansion spree, eyeing $90 billion in capex over the next decade. Our report discusses the group’s FY24 performance and future prospects,” Jefferies India noted.

Other group companies saw EBITDA growth ranging from 16-33 percent, except for Adani Wilmar, which experienced a decline. The group’s net debt, including debt related to the acquisition of the cement business, remained steady at Rs 2.2 lakh crore in FY24 compared to Rs 2.3 lakh crore in FY23.

There was a significant improvement in the net debt/EBITDA ratio, decreasing to 3.3x in FY24 from around 5x YoY.

Adani Ports and Adani Power reduced their net debt during FY24, while Adani Enterprises and Adani Green saw increased leverage due to new capital expenditure projects.