MSCI rejig: Adani Transmission, Adani Total Gas may see outflow of $206 mn

MSCI Indices is likely to announce changes for May in a review likely on May 12, even though the adjustments will take place on May 31, 2023, said Abhilash Pagaria, head of Nuvama Alternative & Quantitative Research in a report on Thursday.

Shares of two frontline Adani group companies – Adani Transmission ($122 million) and Adani Total Gas ($84 million) – as a result may see a combined outflow of $206 million on a likely cut in weightages, Pagaria wrote. Indus Towers, Nuvama's other 'high conviction' stock for exclusion could see an outflow of $83 million, the report suggests.

Kotak Mahindra Bank, Interglobe Aviation - the parent company of IndiGo, Samvardhana Motherson and Zomato are some of the other stocks, Nuvama said, could potentially see an increase in weight. At an aggregate level, Nuvama sees an inflow of $800 million across these stocks with Kotak Mahindra Bank garnering the highest share at $730 million. The expected inflows in the case of Hindustan Aeronautics (HAL) is $190 million, the Nuvama report said.

Shares of Adani Transmission and Adani Total Gas had hit their respective lower circuit filter of 5 per cent on Monday, after MSCI said it would reduce their weights in its indices, following a review of the public float. Thus far in calendar year 2023 (CY23), shares of Adani Transmission and Adani Total Gas have tanked around 65 per cent and 77 per cent, respectively. In comparison, the S&P BSE Sensex has moved up 1.8 per cent during this period, ACE Equity data shows.

Another Adani group company, ACC, Nuvama said is currently safe, albeit borderline. A fall in the stock price from here on out, Nuvama said, could see the stock getting excluded from the MSCI index.

"We have been highlighting this name (ACC) from Rs 1,680 levels and on our expected line is trading 1.5% above April 14 global cut off levels for exclusion. The stock should trade at current market price or higher to be saved from exclusion. If stock fails to be above the cut global cut off price then expected outflow will be  $80mn (3.7mn shares; 6.5 days average traded value)," Pagaria wrote.

Meanwhile, the Adani group, according to a company report filed with the exchanges, is considering raising funds via a stock sale. For this, it is holding a board meeting on Saturday, May 13.

"Notice is hereby given that a meeting of the board of directors of Adani Enterprises Limited (the “Company”) will be held on Saturday, 13th May 2023 at Ahmedabad, inter alia, to consider and approve the proposal of raising of funds by way of issuance equity shares or any other eligible securities (“Securities”) through permissible modes, including but not limited to a private placement, a qualified institutions placement, preferential issue, or any other method or combination of methods as may be permitted under applicable laws, subject to such regulatory/statutory approvals as may be required and the approval of shareholders of the Company," Adani Enterprises, the flagship company of the group said in a statement to the exchanges (BSE) on May 10.