MUMBAI: Shares of
Life Insurance Corporation (
LIC) fell more than 1% in Friday’s relatively weak market over concerns about the
insurer’s exposure to the Adani Group. At close, the LIC stock was at Rs 585, just a tad above its all-time low level of Rs 582. Shares of the
Adani Group continued their relentless decline, dragging down the valuation of the corporation’s investment in the group.
Although
Adani Group insiders insisted that LIC had booked some profit in January this year when the stock prices were near their 52-week highs, the insurance major is yet to come out with any statement about the profit or loss status in its Adani portfolio. According to the last disclosures made to the BSE (see graphic), LIC’s biggest investment was in Adani Ports & SEZ, in which it had a 9.1% stake. It also held between 1.25% and 6.5% stakes in six other Adani Group companies. In the last one month, LIC’s stock has lost nearly 17% of its value.
Friday’s session saw seven of the 10 Adani Group’s stocks closing in the red. Of these seven, four stocks — Adani Total Gas, Adani Green Energy, Adani Transmission and Adani Power — closed at their 5% lower circuit level. Group flagship Adani Enterprises also closed 5% lower, but circuit breakers do not apply to this stock since it’s among those on which derivatives trading is allowed. Among other laggards, Adani Wilmar closed 3.3% lower while NDTV was down 4.1%. Of the remaining stocks, Ambuja Cements closed 2.4% higher while Adani Ports & SEZ was up 1.2%, and ACC closed unchanged.
Earlier this month, replying to a parliament query, the government had disclosed that LIC’s purchase value of equity in Adani Group companies was Rs 30,127 crore. It was also mentioned that the market value of this portfolio at the close of market hours of January 27 was Rs 56,142 crore.
The stock prices of Adani Group companies have been on a southward journey for a month since US short-seller Hindenburg Research published a damning report against the Adani Group, accusing it of accounting fraud, stock price manipulation and corporate malfeasance. Still, the bleeding has not yet stopped for almost all of the Adani Group’s 10 listed stocks.
In its report, Hindenburg had said that if one went purely by the accepted valuation metrics and comparative valuations of its peers, seven of the group’s stocks (that have Adani in their name) should correct by at least 85%. “Compared to industry peers, we see 85%+ downside (for Adani Group stocks) purely on fundamentals,” the report had said.
After Friday’s 5% circuit-breaking close, Adani Total Gas has now lost nearly 81% of its value. And if one considers its fall from its 52-week high level, recorded in April 2022, the stock is down by 84%. Two more stocks also are nearing Hindenburg’s ‘85% downside’ mark — Adani Green Energy has lost nearly 75% in the last one month while Adani Transmission is down 74%.
The slide in the group’s stock prices has wiped out Rs 12 lakh crore, or nearly $146 billion, worth of its market value in the last one month. Compared to a combined market capitalisation of Rs 19.2 lakh crore on January 24, on Friday it was down to Rs 7.2 lakh crore.
IndusInd chairman quits Adani co board
Sunil Mehta, chairman of IndusInd Bank, has stepped down from the board of Adani Green Energy as the private lender has granted credit facilities to the company. The RBI had cleared the appointment of Mehta on January 31 and shareholders will soon vote to ratify the appointment.
RBI’s rules do not permit bank directors to be on the board of companies their bank lends to. Mehta, in a letter to Adani Green Energy, said that the credit facilities were granted before his appointment on the board of the bank. “In view of the applicable statutory/regulatory restrictions, the bank has requested me to relinquish my directorship in AGEL at the earliest as it will otherwise constrain the bank from renewing / rolling over credit facilities till the continuation of my directorship in AGEL,” said Mehta in his letter.
IndusInd Bank said that the board of directors in their meeting on Thursday decided to hold a postal ballot on a special resolution to appoint Mehta as chairman for three years up to January 30, 2026.
Mehta, who is the chairman and MD of SPM Capital Advisors, a boutique business advisory and consulting firm, was earlier the chairman of Yes Bank in the government-appointed board. An insurance industry veteran, Mehta was the non-executive chairman of Punjab National Bank from March 2017 to February 2020.
Hindenburg’s predictions about Adani stocks come true? Group’s net worth dips below $44 billion
