Adani upswell adds 65% to Tuesday’s stock market gain

Three Adani companies shot up 20% each to hit their upper circuit limits, even as the group’s market cap neared ₹14 trillion. Adani Green Energy Ltd, Adani Energy Solutions Ltd and Adani Total Gas Ltd were locked at their upper limits of ₹1,348.50, ₹1,084.40, and ₹878.70 respectively,

In the two trading sessions since the Bharatiya Janata Party (BJP) clinched thumping victories in three state polls, Adani stocks have now contributed 30% to the ₹8.79 trillion addition in investor wealth.

The Gautam Adani-led infrastructure conglomerate had briefly turned capex-cautious after a scathing 24 January report by US-based short-seller Hindenburg Research slammed its stocks. The group that had pledged to control debt levels in April, on Tuesday raised $1.36 billion from a consortium of eight foreign lenders for its renewables arm Adani Green Energy that is planning a 45 GW project through a mega-project in Gujarat’s Khavda. Just six weeks ago, Adani took a $3.5 billion loan to refinance its cement acquisitions—Ambuja Cements Ltd and ACC Ltd.

The group, with over ₹2.27 trillion in debt and subjected to an investigation by Sebi over the past seven months following allegations of “fraud” and “manipulation” by the Hindenburg report, was pushed into a capital-conservation mode. But recent developments favoured Adani group, spurring a change in the group’s strategy.

While reserving its final verdict, the Supreme court on 24 November said reports from short-sellers (such as Hindenburg’s) are neither “credible” nor “true state of affairs”. Adani shares have gained since then; however the sharp run-up came after the assembly poll outcome signalled a clear path for victory for BJP in next year’s Lok Sabha election, assuring a third term for Narendra Modi, current prime minister and Gujarat’s former chief minister.

Gujarat-headquartered Adani group’s stocks displayed an immediate uptrend since the time Indian markets opened on Monday.

In just two sessions, the 10 listed Adani group companies have gained ₹2.7 trillion, recovering a large part of the losses suffered after the 24 January Hindenburg report alleged the group of pulling the largest con in corporate history.

“There was already a massive short-covering post the assembly poll outcomes and those looking for an opportunity to buy found it expedient to invest in the group,” said Rajesh Palviya, SVP (research) at Axis Securities.

The biggest gainer of Adani’s latest leap is Rajiv Jain-led US-based boutique asset manager GQG Partners Llc, which on 2 March entered the Adani group at its historic lows. GQG Partners has pumped in at least ₹37,440 crore into five Adani group firms since March, with the last bulk purchase worth ₹8,811 crore on 16 August in Adani Power. On Tuesday, GQG Partners’ investment in Adani Group was worth ₹64,648.74 crore.

GQG holds a 4.96% stake in Adani Enterprises worth ₹16,850.13 crore; 6.32% in Adani Green Energy worth ₹13,499.95 crore; 5.45% in Adani Energy Solutions worth ₹6,592.5 crore; 5.03% in Adani Ports worth ₹11,042 crore; and 8.1% in Adani Power worth ₹16,664.7 crore.

“Typically, indications of no-change-in-government prior to assembly polls are considered to be positive for any corporate group, since changes in the ruling party often force companies to alter business strategies, especially those engaged in infrastructure, ports and construction-oriented businesses,” the head of a large foreign investment bank said on the condition of anonymity.

Meanwhile, a Bloomberg report on Tuesday cited an official from the US International Development Finance Corp. (or DFC), stating that after having conducted a due diligence investigation of Adani Group, it was satisfied that the accusations in the Hindenburg report which accused Adani of pulling off “the largest con in corporate history,’ weren’t applicable to Adani Ports & Special Economic Zone Ltd, which has recently secured funding commitment from the fund for a Sri Lankan project.

“The group stocks got a further leg-up today on reports of a US government official terming the Hindenburg allegations irrelevant before sanctioning a loan to the conglomerate,” said Palviya, adding that the rally (in the Adani Group stocks) will continue in the ports and gas businesses, and the flagship AEL, which could result in the overall market cap possibly testing the pre-Hindenburg levels over time.

Group flagship Adani Enterprises Ltd gained 17.38%, adding ₹48,809 crore in investor wealth. Adani Power gained 15.33%, Adani Ports and Special Economic Zone 14.95%, Adani Wilmar 9.99%, ACC 8.15%, Ambuja Cements 6.94% and NDTV 18.11%.

Mayur Bhalerao contributed to this story.

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Published: 05 Dec 2023, 11:18 PM IST