Adani group stocks surge after MSCI delays its decision to May

• All the nine Adani group company stocks gained in the first hour of trade on Thursday, adding ₹24,248 crore to the group’s market capitalisation.
  
• This comes after index provider MSCI announced that it is delaying changes in the index weight reduction of two companies, Adani Transmission and Adani Total Gas.
  
• The Adani group’s combined market capitalization is still down by ₹11.83 lakh crore since the Hindenburg report was released on January 24.
  

All the nine Adani group company stocks gained in the first hour of trade on Thursday. Index provider MSCI delayed its decision to make changes to the weightage of Adani Transmission and Adani Total Gas, to May.

As of 10 am, the nine Adani group companies added ₹24,248 crore to the group’s cumulative market capitalisation, the first such gain in several days. Group flagship Adani Enterprises emerged as the top gainer, adding ₹7,418 crore to its market capitalisation.


Source: NSE, as of 10 a.m., February 16, 2023

Earlier on Thursday, MSCI announced that it has pushed back the reduction in index weightages of Adani Transmission and Adani Total Gas to May. It said that this is being done because of “potential replicability issues” in the index.

Last week, MSCI had announced it would reduce the weightage of four Adani companies, including the flagship Adani Enterprises after a reassessment of the free float shares of the companies.

If the reduction would have come into effect from March 1, resulting in investment outflows.

“The cuts, which will come into force at the end of February, will result in smaller weightings for those stocks in MSCI's closely watched indices, triggering outflows as investors who track the benchmarks reduce their shareholdings,” Deepak Jasani, head of retail research at HDFC Securities, said last week.

Adani gives up bid to acquire DB Power

In another setback to the group, Adani Power has given up its bid to acquire DB Power for ₹7,017 crore. The development is the second setback for the group post the Hindenburg report – the first being the withdrawal of the ₹20,000 crore follow-on public offer (FPO).

Adani Power had agreed to acquire DB Power in August 2022, with the purchase set to complete by October 2022. Now, after four extensions to complete the acquisition, the deal has collapsed.

This comes at a time when the Adani group is rethinking its capital expenditure plans, following a rout in its market capitalisation post the Hindenburg report. The group’s combined market capitalisation has declined by ₹11.83 lakh crore since January 24, after Hindenburg Research alleged stock manipulation and accounting fraud.

The erosion in market capitalisation of the group companies has been significant, with Adani Total Gas being the top loser, followed by Adani Green and Adani Transmission.

Moody’s cites rapid market cap decline in its outlook cut

Last week, the rating agency announced a change in its outlook on Adani group companies following the rout in the group’s stocks.

Moody’s downgraded its outlook to ‘negative’ from ‘stable’ for Adani Green Energy, Adani Green Energy Restricted group, and two subsidiaries of Adani Transmission.

“These rating actions follow the significant and rapid decline in the market equity values of the Adani group companies following the recent release of a report from a short-seller highlighting governance concerns in the group,” Moody's said in its note.

However, Moody’s retained its outlook for Adani Ports & SEZ, Adani International Container Terminal and two other companies.

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