Adani Shares Skyrocket Thanks To Supreme Court; LIC Benefits!

The amount of LIC‘s investments on Adani Group companies increased significantly on Wednesday, reaching Rs 44,664 crore. This represents a stunning 54% rise from the previous lowest levels of Rs 28,988 crores.

The mark-to-market amount of LIC’s investment in Adani firms peaked at Rs 88,000 crore. Still, LIC may have purchased or sold shares since the high.

Data from the stock exchange show a significant turnaround in the stocks of flagship businesses AEL and AP and SEZ. LIC, which owns 4.3% of Adani Enterprises, now values its investment at Rs 12,000 crore.

AEL has now made a strong rebound, especially following GQG’s $2 billion purchase of Adani group shares on March 2. This came after the firm placed a risky contra bet by buying over fifteen thousand crore rupees in Adani equities at the height of the Hindenburg-led panic.

“Within five years, depending on valuation, we’d like to be among the largest investors in Adani Group following its family,” Rajiv Jain said in an interview.

LIC also owns 9.1% of APSEZ. The worth of its stake has increased to Rs 14,144 crores as of Wednesday.

It is up from Rs 9,102 crore on February 2. Last Monday, international financial services company Jefferies issued detailed research on Adani group equities, recommending that investors “buy” Adani Ports.

The stock of APSEZ has already rebounded and now trades at pre-Hindenburg investigation levels. According to exchange records, LIC’s stake remained steady during the December and March quarters.

The increase in value further implies that LIC has kept its stake from April 1 of the current year. Following the Hindenburg investigation that raised various claims against the Adani group, LIC came under fire.

Despite these charges, the Supreme Court appointed a six-member team to conduct an investigation. The committee reported to the court that it discovered no misconduct on the side of the SEBI.

Adani Group stocks have risen significantly after the report’s release. The Adani family traded stakes in group enterprises to raise money for debt payments, which boosted the group’s shares.

Furthermore, the group businesses have made steps to prepay debts and have slowed expansion ambitions. They are also concentrating on finishing current projects and have limited their acquisitions activities.

Notably, three of the group’s entities, AE, AT, and AGE, intend to generate financing by selling stock to investors. Despite the rout caused by the Hindenburg report, LIC expanded its interest in each of these companies in the March quarter.

While most Adani companies recovered the majority of their losses during the Hindenburg-triggered collapse during January along with February, Adani Enterprises’ stocks have risen 159% from their 52-week low. Shares have surged 37% in May alone.

Adani Ports as well as SEZ, the group’s money cow, has also made strides towards resuming pre-Hindenburg report levels.

The recent conclusions of a Supreme Court-appointed panel that there were no regulation failures regarding price manipulations in Adani equities brought more solace to investors.

According to estimates, as of January 30, LIC stood on 100% gains on its shares and bond holdings in Adani Group companies. It had an investment value of almost Rs 28,000 crore.

The mark-to-market amount of these investments peaked at Rs 88,000 crore. LIC’s funds under management amounted to around Rs 41.66 lakh crore when it closed on September 30, 2022.

The organization has stated that its vulnerability towards the Adani group is under one percent of its overall AUM at book value. Adani stocks have been under continual selling pressure since January 25, after Hindenburg Research, presented a series of claims against the Adani business.

On February 23, all ten Adani stocks lost Rs 20,000 crore in market capitalization. The total worth of these equities has dropped by more than 60% in the last month, reaching Rs 7.38 lakh crores.

In the meantime, Adani Group’s publicly traded businesses have recovered over half of the market value that they lost following the explosive Hindenburg Research study. The group’s market value surpassed Rs 10 lakh crore early on Monday.

It is a significant increase from the Rs 6.8 lakh crore low reached on February 27. From the end of January, the Gautam Adani-led group’s market valuation has dropped by more than Rs 12 lakh crore, a drop of more than 60% from its peak.

The drop in share prices raised concerns about the group’s exposure to LIC and other state-owned companies. On January 27, the Life Insurance Company reported that its stake within the Adani Group was worth Rs 56,142 crore.

The identical amount, estimated using December shareholding information, comes to Rs 62,550 crore, an impact of Rs 6,408 crore, or slightly more than 10%. AGD and AT, both were valued at Rs 5,689 crore as of Tuesday’s prices.

On Tuesday, LIC’s 6.02 percent investment in ATG was estimated at Rs 5,021 crore. The state-run insurance owns 6.30 percent of Ambuja Cements as well as 6.41 percent of ACC, both valued at Rs 7,520 crore.

The market value of LIC was determined using the ownership stake for the March 2023 period and the stock closure price on May 23. LIC owns shares in seven of the Adani Group’s ten publicly traded companies.

Adani Group shares have risen as well, following reports that the ports-to-power behemoth was considering monetizing some real estate properties deemed non-core to its business.

As of Tuesday’s close, LIC’s 4.26 percent investment in AE was estimated at Rs 12,812 crore. The state-run insurance owns 9.12 percent of Adani Ports for Rs 14,481 crore.

In light of recent news events, it appears that the Hindenburg impact is dissipating and the Adani bulls are back on course to reclaim their mojo. However, the shares are still down more than 14% since the beginning of the year and more than 26% in the last year.

Technically, the RSI for LIC is 75, suggesting that the stock is overvalued. Its one-year beta is less than one, indicating moderate volatility.

According to Akshay Tiwari of Religare Broking, the brokerage remains bullish regarding the life insurance space. Investors wishing to make investments in this sector should consider buying LIC for the long term around 9 to 12 months.

The stock has a target value of Rs 646 according to the brokerage. Meanwhile, Axis Securities analysts stated that the latest price hike in LIC is supported by high volumes, confirming increased involvement.

According to the brokerage, buyers can buy LIC stock “in a staggered manner” with a stop reduction of Rs 565. On the plus side, the LIC shares could rise to Rs 665-720 in the next few months.

The LIC’s stake in the Adani Group increased to Rs 45,000 crore in fewer than two months. This is all thanks to a robust surge in the ports-to-power conglomerate’s listed companies.

Positive Q4 performance and a reversal rebound in Adani Group equities should help prolong LIC’s gain in the short run. For FY23, the LIC board of directors suggested an annual dividend worth Rs 3 per share of equity with a face worth of Rs 10.

While LIC stocks had a rough start following its big IPO the year before, the firm has made a tremendous recovery in the last month. It has increased more than 10%.

LIC shares have increased about 7% in the last five days, and experts are optimistic about the stock’s future.

Proofread & Published By Naveenika Chauhan