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Bulls of Dalal Street dump Gautam Adani’s crown jewels for 4 quarters in a row

Shares of most Adani Group companies may have given superlative returns and some even turned multibaggers in the last 1 year, but Dalal Street’s two big bulls did not participate in this rally.

Data shows that both foreign institutional investors (FIIs) and mutual funds (MFs) have consistently sold Adani Group companies’ shares in the last 4 quarters.

FIIs have trimmed their holdings significantly in Adani Enterprises, Adani Green Energy, and Adani Transmission in the last 4 quarters.

In FPO-bound Adani Enterprises, FIIs have reduced their holding by 123 basis points (bps) in the last four quarters to 15.39% at the end of December.

In Adani Green Energy, where billionaire Gautam Adani has lined up mega expansion plans, FII holdings have dropped by 139 bps to 15.14%.

MFs have consistently sold shares of Gautam Adani’s 2 flagship companies – Adani Enterprises and Adani Ports and Special Economic Zone.

In Adani Enterprises, MF holding was down to 1.2% in the December quarter from 2% in March quarter. In ACC, MF holding dropped to 8.2% at the end of December quarter from 9.2% in March quarter.

Ahead of the launch of the mega Rs 20,000 crore-FPO of Adani Enterprises on Friday, the diversified conglomerate raised around Rs 6,000 crore over 30 institutional investors, but interestingly, the list showed not a single mutual fund participated in the anchor book.

However, global investment funds such as Abu Dhabi Investment Authority (ADIA), Al Mehwar Investments, Citigroup Global, Morgan Stanley, Goldman Sachs, and domestic insurance majors such as LIC and HDFC Life Insurance subscribed to the anchor book.

Adani Group stocks have been one of the best performers on D-Street. In the last one year, shares of Adani Enterprises have given about 88% returns, whereas Adani Total Gas turned a multibagger, gaining 112%.

But Wednesday turned out to be an unlucky day for the group as a negative report by US-based Hindenburg Research led to a major sell-off across the board and eroded nearly Rs 1 lakh crore in market capitalisation.

The report raised several allegations around accounting and corporate governance practices, besides the heavy debt pile of the group.

Street View
The conglomerate believes that the alleged report is timed with a malafide intention to damage Adani Enterprises’ FPO, and some experts too, share a similar thought.

“Many of the facts and the information mentioned in the report aren’t new or unknown. Secondly, they are yet to be proven. So, I think existing holders can continue to hold the stocks in their portfolio,” said Kranthi Bathini, market strategist at Wealthmills Securities.

Deven Choksey of KR Choksey Group is also bullish on the Adani Group and believes that their expansion plans in infrastructure and renewable energy gives global investors an opportunity to play on the India growth theme.

“When global investors look at India for investing into infrastructure for long tenure, particularly the endowment funds, sovereign funds, the insurance funds or the pension funds, they typically look at a proxy to invest in India,” Choksey said in a recent interaction with ET Now.

“Adani Group of companies give them a relatively better amount of clarity under the well-planned chalked out growth plan that they have created. So, I would remain a buy into

this particular space, but I would wait for corrective falls in the market to add further into the portfolio,” he added.

Meanwhile, Daljeet Singh Kohli of Stockaxis.com is avoiding the whole pack given the large debt on books.

“Any company, not just this (Adani Enterprises) company, any company which has a huge debt on its balance sheet we tend to avoid that. So with that view and a biased approach, we are very clear that we are not touching even in this fall also,” Kohli said.

www.intellexconsulting.com, www.janakerala.com, www.economiclawpractice.com, www.yuvamorcha.com

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