BENGALURU: GQG Partner’s 15,446 crore bet on four Adani stocks seems to have brought much-needed near-term relief for the port-to-conglomerate as share prices Group companies recouped after falling up to 80% and there seems to be increased optimism about billionaire Gautam Adani’s ability to raise money from avenues other than the public sector banks.
“We believe investment by GQG brings stability to Adani stocks as it means that marquee investors are willing to put money in the Group,” Naveen Kulkarni, chief investment officer, of Axis Securities PMS told this newspaper.
After losing about 12.50 lakh crore in market value in a month, 10-listed Adani added 1.73 lakh crore to its market capitalisation in the past four sessions on reports of fundraising plans. Shares of flagship Adani Enterprises soared over 50% during this period.
Kulkarni noted that the stake sale provides the promoters of the Adani group with close to $2 billion of cash, which can be ploughed back into the business in case of any requirement in the form of warrants or rights issues or any other form.
Adani Group has not announced where it will utilize the funds. Anshuman Khanna, Director of ValPro and Enablers, said, “The move by the promoters of Adani Group to offload some stake in favour of GQG serves multiple purposes. It further diversifies the holdings in the company in favour of qualitative investors and provides the promoters proprietary equity which can be used to retire debt and/or pool in contribution for committed investments.”
Few experts, however, feel that Adani Group has a long way to go to get out of the woes triggered by the scathing report of short-seller Hindenburg Research. “The Group’s clarification on stock price manipulation is yet to be accepted by the street. A lot will depend on the report submitted by the committee set up by the Supreme Court and probe of market regulator Sebi,” said a leading fund manager requesting anonymity.
“Candidly speaking, I feel the reports won’t impact the group much but there can always be an element of surprise. The action of rating agencies, global financial institutions and the ability of the group to service its debt and fund aggressive expansion plans is what most people would be monitoring,” he added. A day after GQG funding, credit rating agency Icra on Friday revised the outlook for Adani Total Gas and Adani Ports & SEZ from ‘stable’ to ‘negative’. ICRA said it will be monitoring the group’s ability to raise funds from the domestic/global market as equity/debt at competitive rates.
Meanwhile, GQG Partners Inc’s Australian-listed shares fell by 3% on Friday after the $1.87 billion purchase of Adani Stocks. GQG GQG has high exposure in the Indian market and holds significant stakes in heavyweights such as ITC, HDFC, Reliance Industries, ICICI Bank, and State Bank of India.
Its investment in Adani shares has turned eyeballs given its historical investment in fairly valued companies against Adani stocks, which despite the fall are trading at PE multiples of as high as 151. A senior research analyst with a brokerage firm said he is certain that most Adani stocks won’t reach their pre-January 24 levels anytime soon given GQG purchased them at a discount as high as 70%.