Shares of Adani Group’s flagship company Adani Enterprises net gained over 36% in the quarter ended June, after shedding 55% in the preceding quarter.
Shares of Adani Power gained more than 30% in the last quarter, recouping almost all of the losses it made in the March quarter.
In late January, Hindenburg had made major allegations against the Adani Group, including share price manipulation through shell companies, corporate misgovernance, highly leveraged books, and even went on to call it the biggest con in corporate history.
As a result, the group lost billions of dollars in market value and that shook investors’ confidence considerably.
However, the group’s efforts to bring down its debt, reduce pledged shares, major equity infusion by GQG Partners, and positive initial findings by the Supreme-court appointed panel helped in driving the recovery in the stocks.
The cumulative market capitalization of Adani Group stocks rose by more than 10% sequentially in the June quarter to Rs 10 lakh crore.
The group reduced the consolidated debt on books by $2.65 billion through prepayment of share-backed loans and the loan taken to acquire Ambuja Cements. The group portfolio’s combined net debt to operating improved to 3.27x in FY23 from 3.81x in FY22.
In late March, GQG Partners, led by NRI Rajiv Jain, made an over Rs 15,000 crore contra-bet to pick stakes in four Adani Group firms – Adani Ports and Special Economic Zone, Adani Green Energy, Adani Transmission and Adani Enterprises.
In May, the global investment firm raised its stake in the Gautam Adani-run conglomerate and further invested more than $1 billion in three Adani companies in June.
The NRI investor expressed significant confidence in the Adani Group, saying that stocks could even deliver multibagger returns over five years.
The other news that brought some relief to Dalal Street investors was the initial findings of the Supreme Court panel which did not find any regulatory lapse with respect to the stock price manipulation in Adani stocks as alleged by the US-based short seller.
Despite these favourable developments, the recovery in Adani Group stocks wasn’t broad based.
Shares of Adani Total Gas have lost about 25% in the June quarter, after a sharp 76% erosion in market value in the March quarter.
Similarly, Adani Transmission has lost 23% in the June quarter, after 62% losses in the preceding quarter.
Worries persist
The high degree of volatility seen in Adani group stocks a couple of months back, has reduced considerably, but the conglomerate is completely not out of the woods yet.
While releasing the initial findings in May, the apex court has given market regulator Securities and Exchange Board of India (SEBI) two months time to investigate more into the matter.
The regulator is expected to submit its report later in the current quarter.
Besides, news reports last month said that US authorities are investigating investments into Adani stocks by large investors and have issued subpoena to some of them.
The group has clarified that it isn’t aware of any such developments, but Dalal Street investors will keep an eye on the evolving news around the group.
While GQG is steadily increasing its bet on Adani stocks, for the desi investors, it’s still not a “killing buy”.
(Data inputs from Ritesh Presswala)
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
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