Adani Group calls off the FPO.
China had the Evergrande Crisis, and we NOW have a full blown Adani crisis.
Here are some critical points you should know now:
A THREAD...
China had the Evergrande Crisis, and we NOW have a full blown Adani crisis.
Here are some critical points you should know now:
A THREAD...
[1] The Hindenburg report was a trigger, not the cause for the collapse.
A multi billion dollar firm does not lose billions of dollars in market cap JUST due to a report.
A multi billion dollar firm does not lose billions of dollars in market cap JUST due to a report.
[2] FPO was fully subscribed. Then why did they have to cancel it?
Well because if the current market price of the share < FPO price, then why should new investors pay a premium?
Well because if the current market price of the share < FPO price, then why should new investors pay a premium?
[3] FPO was being launched to offset the existing debt.
Now, with the FPO money being refunded (and the firm's credibility dented), it is quite likely that the firm will undergo a massive rebuilding phase.
Here it will restructure debt, sell some assets etc.
Now, with the FPO money being refunded (and the firm's credibility dented), it is quite likely that the firm will undergo a massive rebuilding phase.
Here it will restructure debt, sell some assets etc.
They can't repay their existing debt easily (therefore, they were issuing the FPO to begin with).
Neither can they raise new money easily at this point (the debt market is quite expensive)
Most likely option would be to liquidate some of their assets to pay off the debts.
Neither can they raise new money easily at this point (the debt market is quite expensive)
Most likely option would be to liquidate some of their assets to pay off the debts.
[4] During this time, we are likely to see a strong correction on the stock.
All the rich valuations are very likely to get vanished. Some Banks might sell their pledged promoter holdings.
All the rich valuations are very likely to get vanished. Some Banks might sell their pledged promoter holdings.
[5] The Indian markets will be tested. This is a bottoming out event.
We have been told that Indian banks have very little exposure to Adani debt.
If this is true, the collapse would be limited. If not, it would erode a lot of trust from the Indian market.
We have been told that Indian banks have very little exposure to Adani debt.
If this is true, the collapse would be limited. If not, it would erode a lot of trust from the Indian market.
[6] The worst impact would be on the credit flow cycle (investigations and whatnot will simply generate a lot of negativity). And, will slow down the flow of credit.
And, FIIs would just wait and watch.
We are looking at a 1-2 year correction then.
And, FIIs would just wait and watch.
We are looking at a 1-2 year correction then.
I am hopeful that the government would do everything in its power to restore the faith of the investors.
If you found the thread useful, do consider retweeting the first tweet.
If you found the thread useful, do consider retweeting the first tweet.
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