Adani Group market capitalization plummets Rs 1.58 lakh crore this week

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Shares of companies controlled by Indian billionaire Gautam Adani recorded their biggest weekly fall. In the past five trading sessions, the cumulative market capitalization of all listed companies of Adani Group namely Adani Enterprises, Adani Green Energy, Adani Ports and Special Economic Zone, Adani Power, Adani Total Gas and Adani Transmission fell by Rs 1,58,909.89 crore or 16.72%. On June 11, 2021, the group’s market cap stood at Rs 9,50,356.79 crore which plummeted to Rs 7,91,446.90 crore as of June 18, 2021.

In today’s session barring Adani Enterprises (up 3.72%) and Adani Ports (up 7.15%) all other group companies were locked in a lower circuit of 5% each. On a weekly basis, Adani Power, Adani Total Gas and Adani Transmission tanked around 22.6% while Adani Ports and Special Economic Zone lost 17.31%, Adani Green Energy declined 12.33% whereas Adani Enterprises was down about 7.1%.

The bad news

The fall in Adani Group stocks started on June 14, 2020, Monday when the Economic Times reported that the accounts of three Mauritius-based funds, which are among the top foreign investors in Adani group companies, had been frozen by the National Securities Depository Ltd (NSDL).

Besides the ownership issue on Thursday Andhra Pradesh High Court quashed the state’s 6.4-gigawatt solar project tender. Adani Green Energy (AGEL) in February had won five mega solar power projects of 600 megawatt (MW each under the tender.

That apart Adani group is also in the news for deferring the takeover of three airports — Jaipur, Guwahati and Trivandrum — till December, citing disruptions caused by the second wave of Covid-19.

Damage control

Adani Group on Monday afternoon came out with a clarification saying the three foreign funds- Albula Investment Fund, Cresta Fund and APMS Investment Fund holding shares in Adani Group Companies are active.

“Registrar and Transfer Agent, with respect to the status of the Demat Account of the aforesaid funds and, have their written confirmation vide its e-mail dated 14th June 2021, clarifying that the Demat Account in which the aforesaid funds hold the shares of the Company are not frozen,” said the press release issued by Adani Ports.

Jugeshinder Singh, CFO of Adani Group in interaction with various media houses said that “a malicious attempt to push a patently false story” referring to FPIs accounts.

He further added that “these Funds (FPIs) have been shareholders of Adani Ent since 2010 and these funds became shareholders of other entities due to Adani Ent holding. Blackrock, Vanguard, Teachers, Credit Suisse have acquired stakes in several Adani entities.”

Commenting on no analyst coverage Singh explained that strategic shareholders like Total have done their due diligence before entering into the partnership and the group doesn’t chase analyst for coverage.

What should investors do?

Kranthi Bathini, Director-Equity Strategy at WealthMills Securities, said, “investors should book profit in Adani stocks till the time the group improves corporate governance and bring more transparency. There will be more clarity needed with respect to the recent news. No doubt, prices are at the stratosphere and the valuation matrix is not in favor of investors. Only traders with a high-risk appetite can consider entering these stocks.”

Likewise, market expert Ambareesh Baliga said it is better to stay away from Adani Group of stocks at present. However, those who have already invested in these stocks can look to book some profit.