Thread by @GastroOneIndia

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Is Gautam Adani too big to fail?

What will happen if Gautam Adani's empire collapses?

Many people are asking these questions. This is because the group is heavily into debt, some 2,20,000 Crores of it.

And there are fears that it may not be able to service this debt and may collapse.

But when it collapses, what will happen to the share holders?

The big relief is that retail investors are not holding too much equity in his companies.

That is why the prices could be manipulated and prices could be raised. Most of the equity is held by the promoter. What would be interesting to know, how much of that equity has been pledged to the banks and how much money has been borrowed against those pledged securities.

Because once share prices start to decline, the banks will ask for margin money to cover their risks on the reduced value of equity.

And getting that margin money may become difficult for the promoter group, which in turn could lead to banks selling the pledged securities and recovering their money. This selling may put the shares under further pressure and the prices may plummet.

But no mater what happens to the share prices, the assets created by the borrower still remain in existence.

Unless fraud has been committed and money has been sent abroad after converting it into foreign exchange (I think that might have already happened), the banks should be secure. Problem is who will take over the assets once the bird flees the cage?

And that won't happen anytime soon till Modi is the PM. All institutions have been compromised and nobody dare raise a finger against Adani as long as there is Modi Sarkar.

So make money on his shares till the going is good.

But keep exiting and salting away your gains every once in a while.