(Bloomberg) -- Adani Enterprises Ltd.’s quarterly profit dropped 50% as revenues from coal trading shrank, 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 ($27.4 million) for the quarter through September, compared with 4.6 billion rupees in the year-ago quarter, according to an exchange filing Thursday. There weren’t enough brokerages tracking the firm to derive an average profit forecast. 

Revenue slipped 41% to 225 billion rupees, while total costs were also down 41% 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 March 31. Debt-fueled 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% 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 $150 billion of market value from the billionaire’s listed companies. Adani Group has strongly denied any wrongdoing.

Revenue at the IRM unit, which mostly consists of coal trading and contributes the largest chunk to overall revenues, fell 59% from a year-ago to 124.7 billion rupees. Volumes in this segment dropped by a quarter to nearly 19 million tons, according to a company presentation.

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

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

First Solar Wafer

The company also completed construction of its pilot solar ingots plant and produced the India’s first solar wafer, it said without giving details of the operations. It is one of the winners of a government grant to produce solar modules from scratch, along with Mukesh Ambani-led Reliance Industries Ltd.

Adani’s Grip on India’s Economy Fuels Rebound After Hindenburg

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

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

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

Indian Regulator Seeks Extension on Adani Probe Report

The flagship’s shares have lost almost 43% 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.

Here’s a snapshot of quarterly earnings of other Adani Group firms that have announced so far:

Source: Company filings on exchanges

Adani Ports & Special Economic Zone Ltd. and Adani Energy Solutions Ltd. have not announced their September quarter’s earnings yet.

--With assistance from Rajesh Kumar Singh.

(Updates with table on group companies performance at the end.)

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