Adani shares still under pressure; group firms lose $125-bn macp since January 24

Shares of Adani Group companies remained under pressure on Tuesday even as flagship Adani Enterprises posted a profit for the quarter ended December (Q3) on coal trading and airports performance.

Group companies have now lost over $125 billion, or Rs 10 trillion, in market capitalisation since the close of trading on January 24, a day before Hindenburg Research put out its report.

On Tuesday, Adani Enterprises reported a consolidated net profit of Rs 820 crore for Q3, against a net loss of Rs 12 crore a year ago. Revenue from operations rose nearly 42% YoY to Rs 26,612 crore. Shares of the company traded in the red for most of the morning session on Tuesday before surging to close 1.9% higher at Rs 1,750. The stock has lost more than 50% of its value in the last one month.

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ACC and Adani Ports were the only other group companies to end in the green, up 0.4% and 2.1%, respectively.

Adani Green Energy, Adani Total Gas, Adani Transmission, Adani Wilmar, NDTV and Adani Power slid 5% each. Ambuja Cements was down 1.7% to Rs 336 apiece.

The government on Monday accepted the Supreme Court’s suggestion for a retired judge-led committee to study the recent fall in shares of Adani Group companies and recommend improvements in statutory and regulatory regimes governing the securities market to protect investors in future.

Two large Adani group companies are likely to repay their short-term commercial paper debt as they come due over the next few months, instead of rolling them over as is normal, according to a Reuters report. The group has appointed accountancy firm Grant Thornton for independent audits of some of its companies in a bid to discredit claims by short-seller Hindenburg Research that have battered its stocks and bonds, Reuters reported Monday.

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The MSCI has changed the foreign inclusion factor in Adani Transmission, Adani Total Gas and Adani Enterprises, which could lead to estimated outflows of $416 million in these companies. The MSCI passive trackers will implement changes on February 28.

Adani Enterprises is expected to see its weight decline by 30 basis points, which could lead to outflows of about $161 million, according to estimates by Nuvama Alternative & Quant Research. Adani Transmission and Adani Total Gas will see their weights decline by 30 bps and 20 bps, resulting in estimated outflows of $145 million and $110 million, respectively. ACC’s weight will reduce by 2 bps, resulting in outflows of $12 million.

The affected securities will be further reviewed as part of the Full Country Float Review in May, which could lead to some index deletions and more passive selling, according to experts.

The MSCI defines the free float of a security as the proportion of shares outstanding that is considered available for purchase in the public equity markets by international investors.