Adani Group: Can embattled India tycoon recover from $100bn loss?

India's Adani Group has seen its marketplace worth plunge aft a US concern steadfast made fraud allegations against it. Can its ambitious maturation plans survive?

Until 2 weeks ago, the ports-to-energy conglomerate which operates 7 publically traded companies had a combined valuation of $220bn.

But since 24 January, erstwhile abbreviated seller Hindenburg Research accused the radical of "brazen" banal manipulation and accounting fraud, its valuations person astir halved. The group's laminitis Gautam Adani has seen billions wiped disconnected his idiosyncratic wealthiness and has dropped retired of the database of the world's apical 20 richest people.

The Adani Group has denied the allegations, calling them "malicious" and "baseless" and says it plans person not changed. But investors are intelligibly inactive nervous.

On Monday, the radical said successful a connection that it would prepay loans worthy $1.1bn, taken utilizing shares arsenic collateral, up of their maturity day adjacent year. This, it said, was partially owed to "continued marketplace volatility" and to guarantee investors that the group's promoters would "prepay each shares-backed financing".

Last week, the radical besides called disconnected its secondary stock sale. The 2.5bn (£2bn) it had raised was meant to wage disconnected indebtedness and money projects, including airdrome renovation, expressway operation and an ambitious greenish hydrogen ecosystem.

They bespeak investors are losing assurance successful a company.

Analysts are present watching to spot however the banal terms descent affects the company's operations, currency travel and enlargement plans.

"Most of their ambitious projects volition person to beryllium heavy scaled backmost successful ambition and timetable, due to the fact that they volition person adjacent to nary capableness to rise funds close now," says Tim Buckley, manager astatine Climate Energy Finance, a think-tank that works connected fiscal issues related to modulation from fossil substance to cleanable energy.

It could get wealth to money projects and acquisitions - a communal strategy for infrastructure companies, which helped substance the Adani Group's accelerated growth.

But the group's indebtedness has grown astatine a faster gait than revenues and profitability, which immoderate fearfulness could rise risks of a default - a interest flagged by some the Hindenburg study arsenic good arsenic immoderate analysts.

The radical already has full indebtedness of astir 2 trillion rupees ($24bn; £20bn) - it astir doubled implicit the past 3 years arsenic Mr Adani's ambitions extended to areas specified arsenic 5G and greenish hydrogen.

Nearly two-thirds of Adani's indebtedness is from overseas sources specified arsenic bonds oregon overseas banks, according to a study by planetary brokerage Jefferies.

Until now, the radical has mostly raised funds by utilizing its infrastructure assets oregon shares arsenic collateral. But with banal prices plunging, the worth of this collateral has besides dipped. The backstage wealthiness units of 2 large banks, Credit Suisse and Citigroup, person stopped accepting Adani bonds arsenic collateral, Bloomberg has reported.

Many Indian banks person besides loaned billions of dollars to companies linked to the radical and state-owned security steadfast Life Insurance Corporation of India has invested successful it.

Market observers accidental that the Hindenburg study and the absorption to it volition marque lenders cautious - which means loans could go costlier.

"There is unit connected the company's credibility. It volition marque it highly hard to rise caller loans, particularly successful the overseas market," an Indian firm banker said connected information of anonymity arsenic helium didn't privation to beryllium seen commenting connected the Adani Group.

Another observer, a erstwhile banker with an planetary wealthiness fund, said that the radical whitethorn beryllium forced to hold immoderate projects until the contented settles down. He besides did not privation to beryllium named.

The BBC sent a database of questions to the Adani Group. A spokesperson replied: "All our ongoing projects proceed according to the plan. Adani Group's halfway fundamentals stay unchanged."

Scrutiny connected the radical has present increased. Investors and recognition standing agencies are intimately assessing its quality to rise wealth and repay loans.

S&P Global Ratings has downgraded its outlook connected 2 Adani companies to negative.

"New investigations and antagonistic marketplace sentiment whitethorn pb to accrued outgo of superior and trim backing entree for rated entities," it said.

In a video connection aft the group's stock merchantability was called off, Mr Adani had said that its equilibrium expanse was "healthy and assets robust". He added that the radical has an "impeccable way grounds of fulfilling our indebtedness obligations".

But recognition standing bureau ICRA said successful a connection past week that the group's large, debt-funded superior spending programme remains a cardinal challenge.

Most of the group's capital-guzzling caller businesses specified arsenic greenish energy, airports and roads are housed nether flagship institution Adani Enterprises Ltd (AEL) and beryllium connected it for funds. AEL has capable currency but could travel nether unit if it has to wage involvement for adjacent its subsidiaries.

Some of the group's firms volition beryllium shielded from the existent volatility due to the fact that they ain and run beardown carnal assets specified arsenic ports, airports and factories.

"Adani Ports and Adani Power are the strongest and astir well-capitalised [firms], which means their assets are backed by semipermanent authorities contracts. Most of the loans taken by these companies are against these gross and profit-accruing assets," says the firm banker quoted above.

However, this isn't the lawsuit for immoderate of the group's newer businesses.

Companies specified arsenic Adani Gas and renewable vigor limb Adani Green already person immense indebtedness connected their books and are inactive gathering up their currency flows. This could marque them much susceptible to marketplace shocks and trim their creditworthiness.

The banker points retired that portion the prices of bonds issued by Adani Ports and Special Economic Zone Ltd person fallen lone marginally, those issued by Adani Green had mislaid much than a 4th of their worth successful 3 days.

Deferring caller projects and selling immoderate assets to rise wealth could beryllium a mode out.

ICRA has said that immoderate of the planned superior spending is discretionary successful quality and tin beryllium deferred, depending connected however overmuch liquidity it has.

"The institution has built assets that are invaluable to a processing state similar India, and determination volition beryllium galore strategical investors interested," said a firm advisor who didn't privation to beryllium named.

Some analysts stay optimistic.

"I person seen varied operating [Adani] projects from ports, airports, cements to renewables which are solid, unchangeable and generating a steadfast currency flow. They are wholly harmless from the ups and downs of what happens successful the banal market," says Vinayak Chatterjee, an infrastructure adept who is laminitis and managing trustee of the Infravision Foundation.

Analysts are besides watching to spot if determination volition beryllium a regulatory enquiry into the group's firm governance. The contented has besides acceptable disconnected a governmental enactment implicit Mr Adani's perceived closeness to Prime Minister Narendra Modi, which some deny.

On Monday, the main absorption Congress enactment held protests crossed the country, demanding an probe into the allegations.

Mr Buckley says that arsenic unit mounts, the Adani Group's quality to triumph authorities contracts easy to ramp up revenues volition beryllium challenged. It volition besides find it hard to reconstruct its recognition credibility.

Since the radical has to repay a important amount, it volition person to bash a strategical plus sale, helium says.