Adani stocks lose $10 billion in market value

194
2
Adani stocks lose $10 billion in market value

This week, stocks of Adani Group have lost a combined $10 billion in market value, weighed down by MSCI Inc.'s move toexclude two entities from its India gauge and concerns over potential dilution from a fundraising plan.

Adani Total Gas Ltd. and Adani Transmission Ltd. - the two stocks to be dropped from the MSCI India gauge at the end of this month - headed for their worst weeks since late February. The exclusions are likely to trigger around $390 million of trading by passive funds, said Brian Freitas, an independent equities analyst who publishes on Smartkarma.

Flagship Adani Enterprises Ltd.Adani Enterprises Ltd., the incubator for many of the group's investments, is also set for a weekly loss of almost 4%, the biggest since March. The company and the transmission unit last week announced plans to raise $2.6 billion through a qualified institution placement or other methods, resulting in fears of equity dilution.

If the shares are priced too low in a QIP issue, it could be seen as a sign of weakness or desperation, said Care Portfolio Managers Fund Manager Arpit Shah, a fund manager at Care Portfolio Managers.

In late January, Adani stocks were trying to regain their footing, after fraud allegations by Hindenburg Research led to a rout that at one point erased more than $150 billion from the group's market value. Stocks recovered in March after GQG Partners bought shares in four of the group's companies, giving a vote of confidence. The market-cap loss is at $128 billion, down from $128 billion a year ago.

Adani denies Hindenburg's accusations, while taking steps in the aftermath of the report to alleviate investor concerns about debt and corporate governance.