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Category: SHARE MARKET

  • From Adani Green to Adani Power: All 10 stocks of Adani Group are rising*, aour portfolio too?

    From Adani Green to Adani Power: All 10 stocks of Adani Group are rising*, aour portfolio too?

    From Adani Green to Adani Power: All 10 stocks of Adani Group are rising*, aour portfolio too?

    From Adani Green to Adani Power: All 10 stocks of Adani Group are rising*, aour portfolio too?
    From Adani Green to Adani Power: All 10 stocks of Adani Group are rising*, aour portfolio too?

    **Fitch ratings stable for four Adani Group companies, removes negative outlook**

    New Delhi, March 12 (ANI): Fitch Ratings has upgraded the ratings of four infrastructure companies of the Adani Group, changing their outlook to ‘stable’ from ‘negative’. However, their rating has been retained at ‘BBB-‘.

    The companies whose ratings have been updated are:
    – **Adani Green Energy Limited (AGEL)**
    – **Adani International Container Terminal Private Limited (AICTPL)**
    – **Adani Green Energy Limited Restricted Group 2 (AGEL RG2)**
    – **Adani Energy Solutions Limited Restricted Group (AESL RG)**

    Fitch has removed **Rating Watch Negative (RWN)** on these companies and reviewed the ratings of two other Adani Group companies:
    – **Mumbai International Airport Limited (MIAL)** – It has been placed on Negative Outlook with a ‘BB+’ rating.
    – **North Queensland Export Terminal Private Limited (NQXT)** – Its rating remains ‘BB+’, but the outlook has been kept stable.

    ### Why was this decision taken?

    Fitch has made this change in view of the improved funding position of the Adani Group. The report said that some board members of Adani Green Energy Solutions were convicted by a US court on November 20, 2024, but despite this the group has maintained its strong financial position.

    According to Fitch, the group’s **liquidity (cash flow) and funding needs are now stabilizing.** An example of this is **NQXT’s successful refinancing of 329 million Australian dollars term loan**, which was due in June 2025.

    In addition, **AGEL has also refinanced its $1.1 billion construction-linked funding**, which was due in March 2025.

    ### What does the report say?

    – **AGEL RG1, AGEL RG2, AESL RG and AICTPL** have received stable outlook, indicating that the US investigation has not had any serious impact on them.

    – The group’s **bond security structure remains strong**, providing protection to investors.

    – Adani Group has renewed hedging contracts without increasing additional costs and continues to raise funding.

    ### Why is Mumbai International Airport Limited (MIAL) under negative outlook?

    MIAL has been placed in the negative category due to **near and medium-term funding needs**. In the next few years (FY25-FY29), the company plans to make **large-scale capital expenditure for the reconstruction and capacity expansion of Terminal 1**.

    Fitch will continue to monitor whether the US investigation has any adverse impact on MIAL’s financial position.

  • IndusInd Bank’s Share Price Falls 15% to ₹765.55 on March 11, 2025,

    IndusInd Bank’s Share Price Falls 15% to ₹765.55 on March 11, 2025,

    IndusInd Bank’s Share Price Falls 15% to ₹765.55 on March 11, 2025,

    IndusInd Bank's Share Price Falls 15% to ₹765.55 on March 11, 2025,
    IndusInd Bank’s Share Price Falls 15% to ₹765.55 on March 11, 2025,

    On Monday, IndusInd Bank informed the stock exchanges that it had found accounting errors in its foreign exchange derivatives portfolio, which could impact its earnings and net worth.

    The bank said that during an internal review, it was found that hedging costs related to foreign exchange transactions were miscalculated over the last five to seven years. This review was related to the processes of other asset and liability accounts. The bank had used internal derivative trades on its foreign currency borrowings and deposits till March 31, 2024. This assessment was done in line with the valuation processes of the Reserve Bank of India (RBI) and commercial banks’ investment portfolio, including derivative portfolio management.

    Financial impact and market movement

    This discrepancy is estimated to have a potential impact of 2.35% (about Rs 1500-1600 crore) on the total value of the bank. As of December 31, 2024, the bank’s total assets were Rs 65,102 crore.

    On Tuesday, IndusInd Bank shares recorded their biggest ever fall, closing 27.2% lower at Rs 655.95 on the BSE. This was the lowest level since November 2020 after hitting an intra-day low of Rs 649. The stock also fell 27.06% on the NSE. The stock had already fallen by 4% on Monday after the bank’s CEO Sumant Kathpalia got just a one-year extension from the RBI instead of the three-year term.

    The stock has been falling for the last five sessions and is down 58% from its 52-week high of Rs 1,576.35 hit on April 8, 2024. The fall has eroded the bank’s market capitalisation by about Rs 19,000 crore.

    Analysts’ opinion

    According to Motilal Oswal Financial Services, anomalies were caused by insider trades linked to swap contracts amid low liquidity. This trading was done under 3/5-year yen and 8/10-year dollar borrowings. When the new investment norms came into effect from April 1, 2024, internal swaps done by the banks’ asset liability management (ALM) and treasury desks were exposed.

    A senior analyst told Reuters, “When the currency market became volatile and the dollar strengthened, the treasury department booked these profits. However, the bank should have reported the losses that were incurred due to the ALM desk’s swap trades but it did not do so. Whether this was done deliberately or it was a systemic mistake is not yet clear.”

    Domestic brokerage firm Nuwama raised concerns over the delayed disclosure. “The bank said it wanted to present the most accurate assessment of the impact, hence it was not disclosed in the Q3FY25 earnings report,” the report said.

    Strategy ahead

    IndusInd Bank has appointed an external agency to conduct an independent review of the matter, after which the potential impact can be re-evaluated after the final report is released. According to media reports, PwC is probably handling this review.

    The bank says that this loss may be visible in the March 2025 quarter or the June quarter of FY 2025-26. However, the bank has assured that its profitability and capital adequacy are strong enough to handle this one-time impact.

    IndusInd Bank promoter Ashok Hinduja also assured investors that the bank is financially strong and the promoters will make additional investments if capital is required. He told CNBC-TV18, “Investors need not panic. The banking business runs on trust and transparency. The bank itself has brought this issue to the fore.”

    Impact on the stock and brokerage reaction

    Several brokerage houses downgraded the stock of IndusInd Bank and reduced their price targets. ICICI Securities estimates that this discrepancy will lead to a post-tax loss of Rs 2,000-2,100 crore. “This impact will be reflected in the P&L statement and the bank may report a loss in Q4FY25. Overall, the impact on the bank’s earnings could be up to 25%,” the report said.

    Risks in the banking sector and lessons for investors

    Risks in the banking sector remain persistent, making it challenging for investors to select banking stocks. In recent years, Yes Bank, RBL Bank and Bandhan Bank have also gone through crises.

    Devina Mehra, founder and CMD of First Global, wrote in her LinkedIn post, “Banking is a business where negative surprises outweigh positive surprises. When a bank grows faster than expected, it becomes clear after a few years what problems were hidden in that growth.”