A week of turbulence eroded ₹1.6 lakh crore in market value for the six listed Adani Group companies.
However, on Friday, the flagship firm Adani Enterprises Ltd (AEL) and ports arm Adani Ports & SEZ Ltd (APSEZ) made impressive recovery with gains of nearly 9 per cent and 7 per cent, respectively, on the BSE.
No respite
The other group companies Adani Green Energy Ltd (AGEL) (-4.5 per cent), Adani Transmission Ltd (-5 per cent), Adani Power Ltd (-4.96 per cent), Adani Total Gas Ltd (-5 per cent) extended the loss to end at their weekly-low levels. Analysts look at the rout in Adani group stocks as a temporary slide with the group having strong business foundation in each of the group companies.
The stocks came under severe selling pressure after reports surfaced on Monday claiming National Securities and Depository Ltd (NSDL) has frozen the demat accounts of three Mauritius-based foreign funds over ownership disclosures. The funds collectively held ₹43,500 crore worth of shares in four Adani group companies.
The Group rubbished the reports as “blatantly erroneous” and done to “deliberately mislead the investing community.” But the panic-stricken investors dumped their holding, triggering massive selling on most of the counters during the week.
Collectively, the market capitalisation of the six listed entities of billionaire Gautam Adani-led Group lost about 17 per cent or ₹1.6 lakh crore since June 11, 2021. Total market cap of the six listed entities as on June 18 stand at ₹7.89 lakh crore.
During the week, the worst hit were the relatively new businesses of the group, Adani Transmission Ltd and Adani Total Gas Ltd each lost over 22.6 per cent on the BSE. However, the losses on old and established businesses of AEL, APSEZ were contained at 7 per cent and 17 per cent respectively.
‘Opacity in disclosures’
A Mumbai-based analyst informed that the opacity in the disclosures and information would keep investors at bay for sometime. Requesting anonymity the analyst said, “There was less free-float equity in Adani Group stocks allowing less number of retail participation as compared to other prominent stocks. This means that not many retail investors would have burnt their fingers in this turbulence. But, it has surely left a sourness in the minds of the retail investors, who would be suspicious to get into Adani stocks at least for short term.”
However, the selling pressure won’t be a lasting phenomenon.
A market watcher from Ahmedabad believes that Adani stocks will resume their positive trend soon. “Most of the group companies have fetched multiple-times returns for the investors in the past one year. So, a correction of about 20-25 per cent wouldn’t affect much to such investors. Those who put their money in Adani stocks over past one month would have lost money in this rout. But, investors will return at the right price point, and a reversal in stock prices will happen soon,” the market source informed.