Adani Power, Adani Wilmar shares hit lower circuits as group stocks continue to decline

Shares of Adani Power and Adani Wilmar hit their respective lower price bands in Friday's trade as the conglomerate's stocks continued to bleed after US short-seller Hindenburg Research launched a scathing attack on it. In its report, Hindenburg claimed key listed Adani Group companies had "substantial debt" and "sky-high valuations". Adani, in response, said its debt is at a manageable level and refuted the "allegations as baseless".

Adani Power stock fell 5 per cent to hit its lower circuit level of Rs 248.05 today against a previous close of Rs 261.10. Adani Wilmar also cracked in the same tune to hit a lower price band of Rs 517.30 over its previous close of Rs 544.50.

Other group stocks, namely Adani Enterprises, Adani Ports, Adani Transmission, Adani Green Energy and Adani Total Gas tanked up to 15.96 per cent in early trade. In addition, shares of Adani's recent acquisitions -- ACC, Ambuja Cements and NDTV -- also tanked today in a rub-off effect.

"Adani stocks are likely to continue under pressure due to the fallout from the Hindenburg report. The elevated valuations of Adani stocks are a serious concern," said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

Further, the follow-on public offer (FPO) of Adani Enterprises, the flagship firm of the Adani Group, began today and would remain open for subscription till January 31, 2023.

Adani Enterprises aims to raise Rs 20,000 crore from this FPO and the net proceeds would be used for debt repayment, capital expenditure of subsidiary firms and corporate purposes.

Technical view on Adani Power

"The Hindenburg research report coupled with strong profit booking before Budget 2023 has resulted in a sharp fall in Adani group stocks including Adani Power. A daily close below Rs 247 could trigger a further fall till Rs 217. Investors should now buy only if a daily close is above the resistance of Rs 273," said AR Ramachandran from Tips2trades.

The stock was last seen trading lower than 5-day, 20-, 50-, 100- and 200-day moving averages. The counter's 14-day relative strength index (RSI) came at 27.27. A level below 30 is defined as oversold while a value above 70 is considered overbought. The company's stock has a negative price-to-equity (P/E) ratio of 616.19.

The scrip has a one-year beta of 1.28, indicating high volatility.

Technical view on Adani Wilmar

"Rs 544 is a very strong resistance on the daily charts. A daily close below Rs 492 support could trigger a further fall till Rs 446. Investors should now buy only if a daily close is above the resistance of Rs 544," said Tips2trades's Ramachandran.

Adani Wilmar was seen trading lower than 5-day, 20-, 50-, 100- and 200-day moving averages. The counter's 14-day relative strength index (RSI) came at 34.14. A level below 30 is defined as oversold while a value above 70 is considered overbought. The company's stock has a price-to-equity (P/E) ratio of 101.65.

That said, Adani Wilmar has an average target price of Rs 850, Trendlyne data showed, suggesting a potential upside of 64.46 per cent.

Meanwhile, Indian equity benchmarks extended their plunge in early deals today, dragged by banks, financials and energy stocks.

Also read: Adani Gas, Adani Green, Adani Power, Adani Transmission and other group stocks tank up to 20%

Also read: Adani Total Gas shares sink 20%; Rs 76,000 cr market cap wiped out in two sessions