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Adani Ports stock recovers all losses since Hindenburg attack; Adani Enterprises share price jumps 19% today

All 10 Adani group stocks surged in early trading on Tuesday with Adani Ports jumping as much as 7.7% and Adani Enterprises skyrocketing nearly 19%.

Adani Group’s port unit became the first of its 10 entities to recoup all losses triggered by Hindenburg Research’s bombshell report in late January, as a recent rally in the conglomerate’s stocks gathered steam on Tuesday. All 10 Adani stocks climbed in early Mumbai trading, with shares of Adani Ports and Special Economic Zone Ltd. surging as much as 7.7%. Flagship Adani Enterprises Ltd. soared almost 19% following a similar jump on Monday. The trigger for the rally since last Friday has been an Indian court panel’s report that found no conclusive evidence of stock-price manipulation as alleged by US short-seller Hindenburg.

The combined market value of 10 Adani stocks has surged about $22 billion since Thursday’s close. The value wipeout since Hindenburg’s report now stands at around $105 billion, down from as much as $153 billion at its worst. The ports business houses some of billionaire Gautam Adani’s most lucrative assets and is touted by market watchers as the group’s crown jewel. It is also the most widely tracked Adani stock among sell-side analysts. At present, all 20 analysts covering the stock have a buy rating, data compiled by Bloomberg show.

“Fundamentals of Adani Ports’ business have remained solid,” said Deven Choksey, managing director of KRChoksey Shares & Securities Pvt. in Mumbai. “Its strong cash-generating ability means that it will get the first priority among investors,” he said, adding that the stock remains under-owned by domestic institutional investors who generally prefer high cash-generating companies.

Two US-currency bonds of Adani Ports maturing in 2027 rose by about 0.2 cents on the dollar on Tuesday. They are still trading 6% below the level before the Hindenburg report. In a 173-page report released last week, the court panel said that based on the data from the markets regulator Securities and Exchange Board of India, or SEBI, it saw “no evident pattern of manipulation” in the steep stock-price rise in Adani’s companies that can be attributed to “any single entity or group of connected entities.”

This referred to a central allegation of Hindenburg, which claimed that offshore shell companies tied to the Adani family were bidding up the empire’s shares. Still, the investigations are ongoing, and the regulator has been given time till August 14 by the court to close its probe.

Eqwires Research Analyst

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Not demonetisation! Rs 2000 notes to be withdrawn from circulation, will remain legal tender even after September 30

Withdrawal of Rs 2000 notes by RBI: Is it soft demonetisation? The Reserve Bank of India on Friday, May 19, said Rs 2000 currency notes will be withdrawn from circulation but they will continue to be legal tender.

In what was termed by many on social media as a soft demonetisation move, the Reserve Bank of India (RBI) on Friday surprised everyone by announcing that Rs 2000 currency notes will be withdrawn from circulation but they will continue to be legal tender.

However, this is not a demonetization exercise as it happened in November 2016 when the Government banned Rs 500 and Rs 1000 currency notes.

Instead, the RBI on Friday said that Rs 2000 notes will continue to remain legal tender and the public can either deposit or exchange their Rs 2000 notes slowly till September 30, 2023. The Rs 2000 banknotes will remain legal tender even after September 30.

“…in pursuance of the “Clean Note Policy” of the Reserve Bank of India, it has been decided to withdraw the ₹2000 denomination banknotes from circulation. The banknotes in ₹2000 denomination will continue to be legal tender,” RBI said on Friday (May 19, 2023).

The RBI said that the public may deposit Rs 2,000 banknotes into their bank accounts and or exchange them with banknotes of other denominations in banks until September 30, 2023.

Explaining the reason for withdrawing Rs 2000 notes from circulation, RBI said, “A majority of the ₹2000 denomination notes were issued prior to March 2017 and are at the end of their estimated life-span of 4-5 years. It has also been observed that this denomination is not commonly used for transactions. Further, the stock of banknotes in other denominations continue to be adequate to meet the currency requirement of the public.

The facility for the exchange of Rs 2000 banknotes up to the limit of Rs 20,000 at a time will also be provided at the 19 Regional Offices (ROs) of RBI having Issue Departments from May 23, 2023.

As per experts, the RBI’s decision to withdraw Rs 2000 notes from circulation was not surprising as the life span of such notes was about to end.

Commenting on the RBI’s decision, Rachit Sharma, DGM, Taxmann, said, “The RBI decided to discontinue the Rs 2,000 banknotes because the life span of such notes is about to end, and they constitute just 10.8% of the overall notes in circulation as of 31-03-2023.”

“The Rs. 2,000 currency note will remain legal tender until 30th September. It is not yet clear whether the Bank will ask for the Aadhaar and PAN to exchange the currency note,” he added.

Vimal Nadar, Head of Research at Colliers India said, “The withdrawal of INR 2000 rupee-denominated notes is an expected and timely move towards prudent currency management within the realm of maintaining banking and financial discipline. Such measures further reduce/ eliminate the probable cash component in high-value real estate transactions. In the last few years, RERA and demonetization have brought in significant levels of transparency in real estate, mainly contributing to fair market price determination.”

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GST E-invoicing: A new era of efficiency and accountability in Indian taxation

The e-invoicing system has been mandatory for any businesses that report an annual turnover of over Rs 5 crores with effect from 01.08.2023.

Goods and Services Tax (GST) e-invoicing is a system implemented in India for generating and reporting invoices in a standardized electronic format. It was introduced to simplify the invoicing process and reduce errors while facilitating seamless data exchange between businesses and the Government. Under this system, businesses must generate invoices on their accounting or billing software and upload them to the GSTN portal, validating the information and issuing an Invoice Reference Number (IRN) and a digitally signed QR code.

Initially, the e-invoicing system was made mandatory for businesses with an annual turnover of more than Rs 500 crores. Subsequently, it was extended to businesses with an annual turnover of more than Rs 100 crores, and then to those with an annual turnover of more than Rs 50 crores. The phased implementation was done to ensure a smooth transition to the new system, provide sufficient time to businesses to make necessary changes to their systems and processes and address any issues that arose during the implementation.

The e-invoicing system is now mandatory for all businesses with an annual turnover of more than Rs 50 crores. This threshold was lowered to Rs.20 crore; however, from 1 October 2022, e-invoicing applies to businesses with a turnover of more than Rs.10 crore. The threshold is further lowered to Rs. 5 crore with effect from 01.08.2023.

Despite the implementation of the e-invoicing system, there have been compliance issues. Suppliers are uploading such invoices on the IRP portal on the current date, irrespective of the date of issue of such invoice. Technologically, these E-invoices have been accepted by GSTN until now, covering up for the non-compliance. Rule 48(5) provides that if a specified registered person issues any invoice other than an E-invoice, such invoice shall not be treated as an invoice. The immediate impact of this clause is that no Input Tax Credit would be available to the recipient of such an invoice.

Government imposes time-limit on reporting old invoices on the e-invoice portals
To address these issues and foster timely compliance, the Indian Government has imposed a time limit on reporting old invoices on the e-invoice IRP portals for taxpayers with Aggregate Annual Turnover greater than or equal to 100 crores. Taxpayers in this category will be prohibited from reporting invoices older than 7 days from the date of reporting. This stipulation, however, will only apply to the document-type invoice, and there will be no such time restriction on reporting debit/credit notes. However, in an advisory to taxpayers on May 6, GSTN has deferred the imposition of time limit of 7 days on reporting old E-invoices on the E-invoicing IRP portal for taxpayers with aggregate turnover greater than or equal to 100 crores by three months.

In order to ensure seamless compliance with the new mandate, it is imperative to understand the intricacies of the latest development. For instance, an invoice is dated April 1, 2023 but for some reason, it is not loaded on the IRP portal on the same date. Now, to safeguard the interests of the recipient supplier will report this invoice on the IRP portal later and issue an E-invoice to the recipient complying with all laws. This results in delay in reporting and data aggregation in government systems. Under the new requirement, such invoices cannot be reported after the 7-day window, that is to say, after April 8, 2023(in above case). The intricate validation system embedded within the invoice registration portal will effectively bar users from reporting invoices after the prescribed time limit. Taxpayers must remain cognizant of this time restriction and fulfill their tax obligations promptly, thus promoting operational excellence and cultivating a culture of compliance.

The impact of this development on taxpayers who pay a substantial amount of tax is profound. The new time limit will have a marked influence on the reporting process, necessitating significant changes to their existing systems. Taxpayers will need to ensure that they are adequately prepared to comply with this mandate and align their systems accordingly.

Furthermore, this new requirement may also impact the taxpayer’s Input Tax Credit (ITC) if their supplier cannot generate an e-invoice. Such a situation could lead to the taxpayer being unable to claim ITC, resulting in an augmented tax liability. Therefore, it is incumbent upon taxpayers to ensure that their suppliers are aware of this mandate and equipped to comply with it.

To provide taxpayers ample time to acclimate to this new requirement, the government has earlier proposed implementing it from 01.05.2023 onwards which is now deferred till three months. This will furnish taxpayers with a sufficient grace period to make the necessary changes to their systems, thus ensuring a smooth and seamless transition to the new requirement. The decision to impose a time limit on reporting invoices represents a significant step towards cultivating a more efficient, effective, and streamlined tax collection process. However, taxpayers must be cognizant of the impact of this new requirement.

Eqwires Research Analyst

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