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Adani’s flagship swings to profit amid short seller battle

Adani Enterprises Ltd posted net income of Rs 8.2 billion ($99.1 million) for the quarter ended December 31.

Adani Enterprises' consolidated profit stood at Rs 8.20 billion ($99.11 million) for the quarter ended December 31, compared with a net loss of 116.3 million rupees a year earlier. (File image/Nirmal Harindran)

Gautam Adani’s flagship firm swung to a profit and pledged to lower leverage as the Indian billionaire tries to win back investor confidence after a bruising report from a short seller wiped out more than $120 billion of his empire’s market value.

Adani Enterprises Ltd., based in the tycoon’s home city of Ahmedabad in western India, posted net income of 8.2 billion rupees ($99.1 million) for the quarter ended Dec. 31, it said in a filing Tuesday, compared with a loss of 116.3 million rupees in the same period last year. There weren’t enough brokerages tracking the company to derive an average profit forecast.

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Revenue surged 42% across businesses to 266.1 billion rupees, the filing said, with the so-called integrated resource management — the biggest topline contributor — seeing 38% jump to 175.9 billion rupees. Revenue from mining, airports and new energy also more than doubled in the December quarter. Total costs climbed 37% to 261.7 billion rupees.

Shares rose as much as 10% after the earnings were announced, paring this year’s decline to 53%.

The earnings will be a tailwind for Adani Enterprises, which has a motley mix of businesses spanning coal mining, airports, data centers, digital services and metals. Known for incubating new Adani businesses that are then spun off, the company has weathered a brutal past few weeks that saw its $2.5 billion share sale shelved and its stock plunge after US-based Hindenburg Research accused it of accounting fraud and stock manipulation in a Jan. 24 report.

Despite the ports-to-power conglomerate denying the allegations, it triggered a massive selloff. Hindenburg said in its report that it had taken a short position in Adani’s companies through US-traded bonds and non-Indian-traded derivatives.

Temporary Volatility

“The current market volatility is temporary,” Chairman Adani said in the earnings statement. “As a classical incubator with a vision of long-term value creation, Adani Enterprises will continue to work with the twin objectives of moderate leverage and looking at strategic opportunities to expand and grow.”

The Adani Group is said to have halved its revenue growth target and delayed capital spending plans, Bloomberg News reported earlier this week citing people familiar with the matter. The Indian tycoon has gone into damage-control mode and is seeking to rebuild investor, as well as lender, confidence in the robustness of his empire.