Adani rises on GQG vote of confidence

Adani Enterprises and Adani Ports led the gains, surging 17% and 9.9%, respectively, contributing 65% to the increase in investor wealth on Friday. The other two divested companies, Adani Green and Adani Transmission, remained locked at the 5% upper circuit. The rise in market capitalization is the highest absolute increase since 1 August, when it reached ₹68,385 crore. The SB Adani Family Trust sold between 2.5% and 4.1% of its holdings in Adani Enterprises, Adani Ports, Adani Green Energy, and Adani Transmission for ₹15,446 crore through a series of bulk deals on Thursday.

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However, Adani Ports and Adani Total Gas suffered a setback as ratings agency ICRA Ltd downgraded their outlook to negative from stable, though their ratings remain unchanged. On the other hand, for Adani Total Gas, ICRA enhanced its ratings amount to ₹5,500 crore from ₹2,801 crore.

On Adani Ports, ICRA noted, “the group’s strong financial flexibility and Adani Ports’ track record of refinancing a large part of its debt with borrowings (mostly from overseas debt capital markets) of longer tenures at lower interest rates were the key credit strengths, which have been adversely impacted. ICRA will be monitoring the group’s ability to raise funds from domestic/global market as equity/debt at competitive rates.” The investment by GQG Partners, founded by Rajiv Jain, has been described as a “vote of confidence” for the embattled conglomerate by U.R. Bhat, co-founder of Alphaniti Fintech. “The stake purchase raises the potential for investment by domestic institutions in the likes of ACC, Ambuja Cements and Adani Ports,” Bhat said. “Jain is a very well-known name in the fund management business and would have conducted an abundant level of due diligence before putting money into the group as he is answerable to his clients with assets worth $92 billion.”

GQG, which is listed in Australia, held stakes in Housing Development Finance Corp. (1.42%), ITC (1.29%), HDFC AMC (2.28%) and Cipla (1.16%) at the end of December 2022.

In its Global Equity strategy, it has outperformed the benchmark MSCI ACWI, the global index provider’s flagship global equity index, over one, three and five years, generating total returns of –4.65% (-18.36% for ASCI), 8.92% ( 4%) and 10.12% ( 5.23%) respectively.

“He (Jain) is a cerebral investor who’s not afraid of taking outsized risks,” said Saurabh Mukherjea, founder of Marcellus Investment Managers, who added, “When I was a broker, I used to serve him as a client.”

“We believe that the long-term growth prospects for these companies are substantial, and we are pleased to be investing in companies that will help advance India’s economy and energy infrastructure, including their energy transition over the long run,” said Jain after concluding the investments in the four companies.

The gains in the Adani stocks coincided with the Nifty and Sensex, each rising over a percent and a half to 17,594 and 59,809. The gains came on the back of domestic institutional investors buying stocks worth a provisional ₹2,090 crore. Foreign portfolio investors were net buyers of a marginal ₹246 crore. Nifty’s gains were led by Adani Enterprises and Adani Ports.