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Adani stocks get fresh boost as GQG ups wager, post gains third day on trot

US investment firm says it has raised stakes in Adani group firms; Group mcap now only 44% below pre-Hindenburg levels

Adani Group, Adani

Photo: Bloomberg

Sundar Sethuraman Mumbai

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Adani group stocks posted sharp gains for a third day in a row, with two companies coming close to erasing all the losses seen after US-based short seller Hindenburg Research's report on January 24.

The latest short in the arm to the port-to-power conglomerate came from a report that US-based GQG Partners has hiked its exposure and willingness to back any of the Adani group's "new offerings".

In an interview with Bloomberg, GQG's Chief Investment Officer Rajiv Jain said, "Within five years, we would like to be one of the largest investors in Adani Group, and we would certainly want to be partners in any of Adani Group's new offerings."

Without specifying the companies, Jain said GQG had raised its stake in the Gautam Adani group by 10 per cent, and its holding value was reached $3.5 billion.

In March, GQG Partners acquired shares worth $1.87 billion (Rs 15,446 crore) from the promoter group of four Adani Group companies. Jain-led investment boutique's investment has seen a sharp appreciation in value of its investment as the Adani group's market cap has surged by more than 50 per cent, or Rs 3.7 trillion, since March.

In the past three days alone, the group has seen a 20 per cent surge in market value following the Supreme Court-appointed panel's report.

In their interim report, the six-member expert panel said they didn't find any conclusive evidence to support allegations made by the Hindenburg.

Market players said the SC panel's observations and GQG's fresh backing have helped the Adani group repair damage caused by the short seller's report. Also, the group’s move to reduce its debt levels and pledge to deleverage its businesses too have boosted investor confidence.

Deven Choksey, the founder of KRChoksey Holdings said the Adani group has strong fundamental businesses and they have stayed the same before and after the Hindenburg report.

"What has happened was a change in perception," said Choksey.

Jain told Bloomberg the Adani group has the “best infrastructure assets available in India.”

Shares of Adani Ports & SEZ are currently just 3.6 per cent below the levels seen before the Hindenburg's report, while that of Adani Power are down just 5.2 per cent.

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Flagship firm Adani Enterprises' after gaining 40 per cent in three days, is now less than 24 per cent below its January 24 level.

After the Hindenburg report, the Adani group's market cap had plunged 65 per cent to Rs 6.8 trillion. From those levels, it has bounced back 58 per cent to Rs 10.8 trillion.

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Analysts said the sharp up-move would help the group raise the planned Rs 21,000 crore equity with lower dilution. Earlier this month, Adani Enterprises and Adani Transmission said they would raise Rs 12,500 crore and Rs 8,500 crore in equity capital. In January, the group had to abort its Rs 20,000 crore follow-on public offering as share prices plunged due to Hindenburg's scathing report .

Analysts said further upside in the group stocks could be capped as Sebi is still probing the allegations of alleged violations of the minimum public shareholding and related party transaction (RPT) norms. The apex court has given Sebi until August 14 to finish its probe.

"Now, one must wait for other answers from the regulator's investigation. If the allegations are unfounded, then it is a clean chit. But the larger question is that tomorrow, anyone can come from any corner of the world, make similar allegations, and destroy investor wealth. What action will the regulator take against such rumour mongers? " said Choksey.

 

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First Published: May 23 2023 | 6:33 PM IST

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