Adani group of stocks extended their rally for the third consecutive session on Tuesday after the SC-appointed AM Sapre committee suggested it was not possible to conclude that there was a regulatory failure on the Hindenburg's price manipulation allegation. With a rally of 39 per cent, Adani Enterprises (AEL) emerged as the top gainer in the list. Shares of the company climbed to Rs 2,632.25 on May 23 from Rs 1,888.05 on May 18.
AEL is a flagship company of the Adani group. Its model is to nurture nascent promising or next-generation businesses using the cash flow from established businesses. The company has hived off ports, power, transmission, city gas, solar generation and edible oils divisions into separate entities in the past to create value for stakeholders. Investments in airports, green hydrogen, data centres and roads are likely to be ramped up over the next decade and are expected to be the next growth driver for business.
Shares of Adani Wilmar (up 29 per cent), Adani Power (up 16 per cent), Adani Transmission (up 15 per cent) and Adani Green Energy (up 15 per cent) also gained in double-digits.
Adani Total Gas, Adani Ports and Special Economic Zone, NDTV, Ambuja Cements and ACC also gained between 5 per cent and 14 per cent amid the ongoing rally in the group stocks. Meanwhile, the cumulative market capitalisation of Adani firms jumped to Rs 10.79 lakh crore on Tuesday from Rs 9 lakh crore on May 18.
GQG Partners chairman and chief investment officer Rajiv Jain said on Tuesday that the US boutique investment firm has raised its stake in the Adani group by 10 per cent and its total holdings in the conglomerate now stand at $3.5 billion.
The veteran investor confirmed the development to Bloomberg in an interview, adding that GQG will take part in the conglomerate’s future fundraising as he remains bullish about what he calls “the best infrastructure assets available in India”.
Which Adani stock to buy now?
Market watchers hold mixed views on the group stocks. Global brokerage Jefferies has ‘Buy’ ratings on two Adani Group stocks namely Adani Transmission and Adani Ports. Adani Transmission, it said, could be a key beneficiary of the Distribution Amendment Act if it comes through, the brokerage said adding that Medium-term double-digit growth for Adani ports should continue as it replicates the Mundra market share gain story at its acquired ports.
In the case of Adani Ports, Jefferies said the company is India’s largest port operator by volume with a dominant 22 per cent market share. It noted that the management is looking to leverage its strong balance sheet to benefit from gradual volume recovery, as global container rates ease. It is also looking to grow in logistics/warehousing to offer customers end-to-end solutions, Jefferies said in a note.
Vinit Bolinjkar, Head of Research at Ventura Securities said that the clearance given by market regular Sebi clearly indicates that there is no corporate misgovernance. Earlier, shares of the conglomerate fell because of external factors. There’s nothing to do with the business. Adani group of stocks should climb the walls of worry now. The leverage has also been lightened.
Also Watch: Stocks that Religare Broking recommended on May 24, 2023: Ashok Leyland, Berger Paints, Indian Hotel Company
“We are going to see a huge number of institutional investors coming in buying these stocks because the clouds of uncertainty around stocks have been cleared. At the same time, valuations are also good. They have access to growth capital. The group has emerged stronger. Adani Total Gas and Adani Ports are abysmally valued with strong businesses and cash flow businesses. Adani Enterprises has prioritised asset allocation. With their impending IPO, the green energy business will get wings. That is not discounted in valuations. I will not be surprised if analysts give a target of Rs 4,000 to Adani Enterprises,” Bolinjkar said.
VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services added that Adani stocks have rallied in response to the Supreme Court expert panel’s remark that “at this stage, taking into account the explanations provided by Sebi, supported by empirical data, prima facie, it would not be possible for the committee to conclude that there has been a regulatory failure around the allegation of price manipulation.”
“The high integrity of the members of the panel must have given confidence to investors to buy the beaten down stocks. Some short covering also would have contributed to the rally. From a valuation perspective Adani stocks are not undervalued,” Vijayakumar said.
Abhishek Basumallick, Chief Equity Advisor, Intelsense Capital said, “News flow has now slowly started turning positive from extremely negative that we saw from January onwards, so things seem to have more bottomed out. The recent SC development acted as a fillip to the stock in the recent past. Valuations still continue to be slightly challenging. Businesses will continue to perform as they were performing earlier. At present, I am tracking Adani Ports and Adani Wilmar from the sidelines with no intention to buy or sell at this point in time.”
Also Watch: LIC share price rises ahead of Q4 results, up 9% in 1 month; should you buy? See what analysts say
Also Watch: Best large cap mutual funds in 10 years: These MF schemes have delivered up to 16.8% SIP returns
Also read: Hindalco to share Q4 results today. Profit may drop 35-43% YoY; all eyes on Novelis performance
Also read: Adani Green Energy shares in focus as board meet on fundraising postponed, again