Adani stocks lose $10 billion in value as MSCI exclusion weighs

By Chiranjivi Chakraborty

Stocks part of Adani Group have lost a combined $10 billion in market value this week, weighed down by MSCI Inc’s move to exclude 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 will probably trigger around $390 million of selling by passive funds, Brian Freitas, an independent equities analyst who publishes on Smartkarma, predicted earlier.

Credit: Bloomberg Photo

Flagship Adani Enterprises Ltd, incubator for many of the group’s investments, is also set for a weekly loss of almost 4 per cent, the biggest since March. The company and the transmission unit last week flagged plans to raise $2.6 billion via a qualified institutional placement or other modes, triggering concerns 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,” Arpit Shah, a fund manager at Care Portfolio Managers, wrote via email.

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Adani stocks have been trying to regain their footing after fraud allegations by Hindenburg Research in late January spurred a rout that at one point wiped out over $150 billion from the group’s market value. Stocks recovered after GQG Partners in early March bought stakes in four of the group’s entities, offering a vote of confidence. The market-cap loss currently stands at about $128 billion.

Adani has denied Hindenburg’s allegations, while taking steps in the aftermath of the report to assuage investor concerns over debt and corporate governance.