Adani Group company shares rallied up to 15 per cent on the BSE in Monday’s intraday trade amid a firm market momentum after a clean sweep by the Bharatiya Janata Party (BJP) in three Assembly elections.
However, except Adani Power and Adani Port, the rest of the Adani Group stocks have underperformed the market in calendar year 2023 as an unsubstantiated report by the US-based short seller Hindenburg Research resulted in the group’s stock crashing in January.
Following the assembly elections results in Chhattisgarh, Madhya Pradesh, and Rajasthan, the Adani group flagship Adani Enterprises hit a 10 per cent upper circuit, while Adani Energy Solutions rose 14 per cent. Adani Power and Adani Green Energy surged over 12 per cent. Adani Total Gas, Adani Ports, and Adani Wilmar advanced 5-8 per cent.
“These results, branded as a semi-final to the forthcoming May’24 Loksabha elections, will provide comfort to the markets as far as political stability is concerned. The incumbent BJP’s performance in avoiding anti-incumbency and retaining a big state like MP (5th consecutive term) while managing to regain Rajasthan and Chhattisgarh should provide them with a good tailwind for the 2024 general elections,” said Motilal Oswal.
“While state elections have shown no correlation with Loksabha elections in the past (BJP had lost these three states in Dec’18 but won the 2019 Loksabha elections with a better majority than 2014), it nonetheless removes a key overhang of political uncertainty for the markets for the next five months,” it said.
Stocks have been rising since last week following the Supreme Court’s conclusion of hearings in a lawsuit where market regulator SEBI is investigating extensive allegations of corporate wrongdoing against the conglomerate, analysts added.
Gautam Adani now ranks 20th on the Bloomberg Billionaires Index with a $65.8 billion fortune. A stock rally in firms owned by Gautam Adani added $5.6 billion to his net worth last week, according to Bloomberg.
Adani Group saw a wealth surge of over Rs 1.76 lakh crore in last one week.
The Supreme Court last week reserved judgment on PILs seeking a court-monitored probe into allegations by Hindenburg Research against the Adani group for stock market violations. The Court questioned SEBI on safeguarding investors from market fluctuations. Allegations of inflated share prices caused a significant drop in Adani companies’ value, prompting petitions. The Court’s intervention stemmed from the stock market’s extreme volatility during the hearings.
Despite the pending court verdict and ongoing regulatory probe posing uncertainty for the conglomerate, investors remain optimistic about the Adani Group’s future after the recent earnings.
Listed Adani group companies saw a substantial year-on-year (Y-o-Y) increase in net profit during the first half of 2023-24 (H1FY24), more than doubling to Rs 24,494 crore despite a decline in revenue. These ten firms reported a 92 per cent surge in net profit, while their net sales dropped by 14.4 per cent to Rs 1.50 trillion in H1FY24 as per ACE Equities data. Additionally, the total debt by September 2023 marginally decreased by 1.2 per cent to Rs 2.18 lakh crore compared to FY23’s Rs 2.21 lakh crore.
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