Adani Group stocks jump after US-based investment firm GQG Partners bet

All 10 group stocks rally as market sees $1.87-bn investment as vote of confidence

All the 10 Adani Group stocks rallied on Friday, capping their best week since Hindenburg Research’s report was published on January 24, and led to a wipe out of over $150 billion (Rs 12 trillion) of its market value.

Rajiv Jain-led GQG Partners’ acquisition of $1.87 billion (Rs 15,446 crore) worth of stake in four Adani Group companies was seen by investors as a vote of confidence for the beleaguered group.

The group flagship Adani Enterprises rallied the most at 17 per cent, extending this week’s gain to 43 per cent. Adani Ports & SEZ gained nearly 10 per cent, while the remaining eight stocks added around 5 per cent each. The group added Rs 1.39 trillion in market value after the announcement, narrowing the losses since the Hindenburg report’s release to below Rs 10.7 trillion.

“After the near $2 billion investment by GQG partners in Adani Group, the stock market has heaved a sigh of relief, creating a kind of floor for Adani Group stocks since a marquee investor has invested in them at these prices,” said Naveen Kulkarni, chief investment officer, Axis Securities.

“Also, promoters can use the money raised through the transaction to infuse capital in any group company requiring the funds. The investment also leads to a belief that the Adani Group stocks have stabilised and can raise capital if they want at current prices,” he added.

GQG invested between Rs 1,898 crore and Rs 5,460 crore in four Adani stocks at a discount of between 4.3 per cent and 12.2 per cent through the stock exchange route.

Analysts said the investment will also increase the free float in these four stocks, which will lead to an increase in their weighting in global indices such as MSCI.

“Based on the shareholding pattern from December 2022, we expect the free float for the stocks to increase between 2.55 per cent and 4.1 per cent. This increased float will be reflected in the foreign inclusion factor (FIF) for MSCI and the investable weight for the NSE, BSE and other global indices. Of course, the key is how the shareholding pattern changes till the end of March,” said analyst Brian Freitas of Periscope Analytics, who publishes on Smartkarma.

GQG Partners’ Jain termed Adani Group’s infrastructure portfolio as “phenomenal, irreplaceable assets”.

LIC back in green

Adani Group stocks have rallied between 4.5 per cent and 43 per cent this week. This has once again turned insurance behemoth LIC’s investment in the group stocks profitable. LIC has stakes ranging from 1.28 per cent to 9.14 per cent in seven Adani stocks. The investment value in these companies is about Rs 30,127 crore. “At the end of last week, LIC was staring at a mark-to-market loss of about Rs 5,000 crore. This week’s gain has improved the returns to about Rs 3,000 crore,” said an analyst. Shares of LIC rose 2.5 per cent on Friday to close at Rs 616.