Apple, Amazon, Walmart: Adani Group Is Trading At Higher Valuations Than These Companies Despite Market Rout

Despite the recent rout in the Adani Group of companies’ stock after the US-based Hindenburg Research report, the Indian conglomerate's listed firms retain their astronomical valuation.

What Happened: Based on the traditional stock-market measures, about five of the group's seven core listed companies are trading at higher price-to-earnings, or PE, multiples compared to some of the most valued U.S. companies, such as Apple Inc. AAPL, Amazon Inc AMZN and Walmart Inc WMT. 

See Also On Benzinga India: Adani Hires Top US Law Firm To Settle Dust After Hindenburg Allegations: Report

During trading hours on Monday, the seven core companies of the Adani Group had an average price-to-earnings ratio of 116 times their earnings in the past 12 months, according to stock exchange data. At the same time, the comparable PE multiples for Apple were at 25.6, 98.6 for Amazon and 44.41 for Walmart at the close of the last trading session.

What Is Price-To-Earnings: The price-to-earnings ratio shows the price the market is willing to pay for a stock based on its earnings. Higher the PE, more expensive is the stock.

Adani Vs. Hindenburg: On Jan. 24, U.S. short-seller Hindenburg accused Adani Group of engaging in a "brazen stock manipulation and accounting fraud scheme over the course of decades."

The accusations led to a massive downfall in the group's listed stocks and saw around half their value — more than $110 billion — wiped off the market. 

Following that, chairman Gautam Adani said the board felt it would “not be morally incorrect” to proceed with the FPO and called off its fully-subscribed FPO. 

According to a Bloomberg report, the conglomerate has halved its revenue growth target and plans to hold off fresh capital expenditure following the Hindenburg jolt.

An analyst has also expressed worries that the company might face serious hurdles if the valuations drop further. “Any big decline in equity valuations, such as what has happened, will trigger margin calls, with the worst-case scenario of this turning into a downward spiral that unravels the conglomerate structure,” Anand Batepati, co-founder at GFM Asset Management in Hong Kong, told Nikkei Asia.

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