ADANI Enterprises’ quarterly profit dropped 50 per cent on slowing revenues, highlighting headwinds for billionaire Gautam Adani’s flagship firm after it battled a brutal short seller attack earlier this year.

The Ahmedabad-based company posted net income of 2.28 billion rupees (US$37.3 million) for the quarter through September, compared with 4.6 billion rupees in the year-ago quarter, according to an exchange filing on Thursday (Nov 2). There weren’t enough brokerages tracking the firm to derive an average profit forecast.

Revenue slipped 41 per cent to 225 billion rupees, while total costs were also down 41 per cent to 221.9 billion rupees. The profit took a hit due to depreciation charges and a correction in coal prices that crimped revenues from Integrated Resource Management, or IRM, business.

Gross debt has risen to 421 billion rupees as of Sep 30 compared with 383.2 billion rupees on Mar 31. Debt-fuelled rapid growth of the conglomerate in recent years was one of the red flags that credit watchers had flagged last year.

Shares gave up the day’s gains to close 0.1 per cent lower after the earnings were announced.

Uneven path

The tepid earnings at Adani Enterprises – known to incubate new businesses before spinning them off – show the uneven path to recovery for the ports-to-power conglomerate that has been trying to move past a scathing report by Hindenburg Research in January. The US short-seller’s allegations of wide-ranging corporate frauds had at one point erased more than US$150 billion of market value from the billionaire’s listed companies. Adani Group has strongly denied any wrongdoing.

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Revenue at the IRM unit, which mostly consists of coal trading and contributes the largest chunk to overall revenues, fell 59 per cent from a year-ago to 124.7 billion rupees.

The new businesses it’s incubating, however, have done well. New energy revenue more than tripled to 18.8 billion rupees while airport business turned in 48 per cent higher revenue at 19.1 billion rupees. Earnings before interest, tax, depreciation and amortisation rose 39 per cent to 29.8 billion rupees.

Our “results have been boosted by the core infrastructure incubating businesses,” said Gautam Adani, chairman of the Adani Group, saying it was a “strong testament” of Adani Enterprises’s ability to scale up new businesses in the conglomerate.

Adani Enterprises, which houses a motley mix of businesses ranging from airports and roads to energy data centres, and other group firms have begun showing some signs of regaining investor and lender confidence in recent months.

IHC, which first invested in the flagship in 2022, inched up its stake to 5.04 per cent earlier this month. GQG Partners bought equity worth US$1.1 billion in Adani Power in August, days after Qatar Investment Authority invested US$474 million in Adani Green Energy.

The group also managed to close a US$3.5 billion funding deal this month – one of Asia’s biggest loans – to refinance debt used to acquire Ambuja Cements and ACC last year. It further expanded capacity by buying a smaller Indian cement maker, Sanghi Industries, in August.

Investors are still looking for steer on when and how Adani Enterprises will raise funds after it got board approval in May to raise as much as US$1.5 billion. They are also awaiting the findings of a court-mandated probe by India’s markets regulator into potential breaches by the group or its founders.

The flagship’s shares have lost almost 43 per cent this year so far, underscoring the deep blow dealt by the short seller attack. Shares of only two of the 10 Adani Group firms have recovered fully from the sell off triggered by the Hindenburg report. BLOOMBERG