Adani Group stocks crash; Rs 1 lakh crore market cap wiped out

Adani Group stocks crash; Rs 1 lakh crore market cap wiped out

On Friday, the total market capitalisation of Adani Group was Rs 9.5 lakh crore. It fell more than 10 per cent or nearly Rs 1.03 lakh crore today

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Adani Group stocks crashed in the morning trade today on a report that the National Securities Depository Ltd (NSDL) has frozen the accounts of three foreign funds that together own shares worth Rs 43,500 crore in four Adani Group companies.

On Friday, the total market capitalisation of Adani Group was Rs 9.5 lakh crore. It fell more than 10 per cent or nearly Rs 1.03 lakh crore today.

The promoter group owns 74.92% in Adani Transmission, 74.92% in Adani Enterprises, 74.80% in Adani Total Gas, and 56.29% in Adani Green.

Seven foreign funds own the majority of public shareholding in Adani Group. These funds are Vespera Fund, Elara India Opportunities, Albula Investment Fund, Cresta Fund, APMS Investment Fund, Asia Investment Corp, and LTS Investment Funds.

Most of the funds are based out of Mauritius and a few of them are inactive too. They are registered at the same address in Port Louis and don't have websites.

According to the data on Bloomberg, Albula Investment fund and APMS Investment fund have put more than 95% of their investments in Adani group firms. Cresta Fund too has parked in 97.7% of their investments in the Adani Transmission, Adani Enterprises and Adani Total.

Asia Investment Corporation Ltd held stake in three companies of Adani group, which accounted for 99% of its portfolio. Vespera Fund Ltd held stake in four companies of the Group which accounted for over 98% of its portfolio.

The accounts of Albula Investment Fund, Cresta Fund, and APMS Investment Fund were frozen on or before May 31, as per the depository's website.

An account freeze indicates that the funds would not be able to sell any of the existing securities or buy any new securities.

Officials at custodian banks that handle foreign investors said that the freeze on the three accounts could be because of insufficient disclosure of information regarding beneficial ownership under the Prevention of Money Laundering Act (PMLA), as mentioned in a report in The Economic Times.

Interestingly, Adani Group stocks have been on a roll for the past few months. Adani Total Gas has delivered over 1,100 per cent returns while flagship firm Adani Enterprises has zoomed 950 per cent in the past one year.

The low free float has been the subject of discussion in the Adani Group stocks but the news never hampered the continuous rally. However, after today's crash, analysts are now saying that the investors should remain cautious in the related stocks.

AR Ramachandran, Co-founder & Trainer at Tips2Trades said, "The Adani Group stocks were long due for a correction with strong support now at Rs 1,200 for Adani Enterprises. A daily close above Rs 1,450 could stem the current fall. Investors are advised to stay on the sidelines till either level has been breached."  

Sharing the technical view, Jay Thakkar - VP and Head of Equity Research at Marwadi Shares and Finance said, "Adani Enterprises share was highly overbought and it has reversed from quite an oversold region. It has completed wave 3 on the upside. So good consolidation or correction from these levels can be seen. In the medium term, it can correct until Rs 1,100-Rs 900 levels."

"Adani Ports in the short term is forming wave 4, which means that the short to medium-term trend is negative. It has corrected sharply in today's trading session. So, in the short term Rs 675 and in the medium term 590 - these are the two supports. In this dip, it should be utilised as a buying opportunity since once this correction is over wave 5 up will take it back to newer highs," he added.

Adani Group, which has a presence in ports, airports, power, gas distribution, among others, is also set to enter the cement business.

Recently, Adani Enterprises Ltd informed that it has incorporated a wholly-owned subsidiary namely Adani Cement Industries Ltd (ACIL) on June 11.

ACIL, which has an authorised share capital of Rs 10 lakh and a paid-up share capital of Rs 5 lakh, is yet to commence its business operations, Adani Enterprises said in an exchange filing.

Adani Enterprises' share declined 25 per cent t o hit an intraday low of Rs 1,201.10 against the previous close of Rs 1601.45 on BSE. Market cap of the firm fell to Rs 1,40,500.74 crore.

Share of Adani Ports was down 19 per cent to hit an intraday low of Rs 681.50. Market cap of the firm fell to Rs 1,46,444.65.

The other listed companies of the Group, Adani Green Energy, Adani Total Gas, Adani Power and Adani Transmission hit lower circuits at 5 per cent with only sellers on the counters.

Meanwhile, Adani Group said the reports are "blatantly erroneous and is done to deliberately mislead the investing community."

"We regret to mention that these reports are blatantly erroneous and is done to deliberately mislead the investing community. This is causing irreparable loss of economic value to the investors at large and reputation of the group," the Adani group told the stock exchanges today.

Later, Rakesh Mehta, Vice President of National Securities Depository Ltd said the accounts of three foreign funds that are among the biggest backers of the Adani group are "active" and not frozen.

The central securities depository's response came after Adani group shot an email to the NSDL, asking the status of three foreign funds.

The company also provided the details of Demat accounts of the three funds mentioned in media reports, including Apms Investment Fund Ltd, Albula Investment Fund Ltd and Cresta Fund Ltd. The freeze, however, is on accounts of the funds that hold certain other securities and is not new.