Adani Enterprises, after a sharp recovery on Friday, was back on falling trajectory on Monday as the stock plunged another 10 per cent amid the negative news flow for the Gautam Adani led conglomerate. The stock traded volatile during the day.
Shares of Adani Enterprises, plunged another 10 per cent to Rs 1433.60 on Monday, before making a recovery to Rs 1,501.10 at 10 am. However, the scrip hard settled at Rs 1,584.20 on Friday after a sharp rebound of 56 per cent from its day's low at Rs 1,017.10 during the previous trading session.
Adani Enterprises' shares have wiped out more than two third of its value from its 52-week high at Rs 4,189.55. The stock is down 60 per cent in the last one month, whereas it has lost about half of its value in the last five trading sessions. Its marketcap has fallen below Rs 1.75 lakh mark on Monday.
Aswath Damodaran finds fair value of Adani Enterprises at Rs 945, said the valuation guru in his latest blog Musing on Markets. Damodaran said even at Rs 1,531, the company is priced too high, given its fundamentals that includes cash flows, growth expectations and risks involved.
In his value estimation, Damodaran did not factor in the damage that might have been done to the company's reputation and long-term value by the Hindenburg episode. Damodaran’s share price estimate for Adani Enterprises, he said, is based on upbeat assumptions on revenue growth and operating margins.
Shares of Adani Group have been hit hard ever since Hindenburg Research's report alleged the Gautam Adani led conglomerate over higher leverage, malpractices and manipulation of the stock prices. The company had to withdraw its Rs 20,000 crore follow-on public offering (FPO), which was not read well by the markets.
The stock was also excluded from Dow Jones Sustainability Index amid the row, which turned out to be another jolt for the investors. Along with this, the National Stock Exchange (NSE) put the stock under Additional Surveillance Measure (ASM) framework, which means additional margins will be required for the trade.
Mileen Vasudeo, Senior Technical Analyst at Arihant Capital Markets said that Adani Enterprises has seen a strong sell-off. For the current week, it is down by 44.52 per cent and on a yearly basis, it is down by 58.87 per cent.
"At present, the RSI is in an extremely oversold zone. Hence a bounce cannot be ruled out from the current levels. Hence, hold the short position with a stop loss of Rs 1,980 with a target of Rs 1,000 – Rs 600 levels in a couple of weeks," he said.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Business Today)
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Also read: Adani Enterprises shares are worth Rs 945 apiece despite upbeat assumptions, says Aswath Damodaran