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Fears of loss Adani Group portfolio send LIC near an all-time low

Life Insurance Corporation’s (LIC) shares fell more than 1% on Friday, in line with a relatively weak market. Concerns about the insurance company’s exposure to the Adani Group weighed on investor sentiment.

At close, LIC’s shares were at Rs 585, just slightly above the all-time low of Rs 582. Adani Group shares continued their relentless decline, dragging down the valuation of the company’s investment in the group.

While Adani Group insiders noted that LIC posted some gains in January this year as share prices neared their 52-week high, the insurer has yet to state its profit or loss statement. Adam’s wallet

According to the latest disclosure to BSE, LIC’s most prominent investment is in Adani Ports & SEZ, which has a 9.1% stake. It also owns between 1.25% and 6.5% stakes in six other Adani Group companies. LIC’s shares lost nearly 17% of their value last month.

In Friday’s trading, 7 of the 10 Adani Group stocks closed in the red. Of these seven, four stocks (Adani Total Gas, Adani Green Energy, Adani Transmission, and Adani Power) were closed 5% lower.

The group’s flagship Adani Enterprises, also closed down 5%, but the circuit breaker does not apply to this stock as it is among the stocks where derivatives trading is allowed. Among the laggards, Adani Wilmar closed down 3.3%, while NDTV fell 4.1%. Of the remaining shares, Ambuja Cements closed up 2.4%, Adani Ports & SEZ rose 1.2%, and ACC closed unchanged.

Earlier this month, in response to a parliamentary question, the government revealed that the value of LIC’s purchase of shares in Adani Group companies was Rs 30,127 crore.

The Adani Group company’s share price has been heading south for a month since US short-seller Hindenburg Research published a damning report on the Adani Group, accusing it of accounting fraud, share price manipulation, actions, and corporate malfeasance. Still, the bleeding has continued for almost all of Adani Group’s 10 publicly traded stocks.

In his report, Hindenburg said that if one is guided solely by accepted valuation metrics and comparative peer valuations, seven of the group’s stocks (which have Adani in their name) should be at least 85% correct. “Compared to industry peers, we see a decline of more than 85% (for Adani Group shares) on an underlying basis alone,” the report said.

After a 5% circuit breaker close on Friday, Adani Total Gas has lost nearly 81% of its value. And when you consider its decline from its 52-week high, recorded in April 2022, the stock is down 84%. Two other stocks are also approaching the ‘85% down’ Hindenburg: Adani Green Energy is down almost 75% in the past month, while Adani Transmission is down 74%.

The group’s share price drop has wiped off Rs 12 lakh crore, or nearly $146 billion, from its market value in the past month. Compared to a combined market capitalization of Rs 19.2 lakh crore on January 24, it fell to Rs 7.2 lakh crore on Friday.

IndusInd President Resigns From The Joint Directorship of Adani.

Sunil Mehta, president of IndusInd Bank, has resigned from the board of Adani Green Energy as the private lender provided a line of credit to the company. The RBI approved Mehta’s appointment on January 31, and shareholders will soon vote to confirm the appointment.

RBI regulations do not allow bank directors to sit on the board of directors of companies to which their bank lends. In a letter to Adani Green Energy, Mehta said the credit line grant before his appointment to the bank’s board.

IndusInd Bank said the board of directors at Thursday’s meeting decided to hold a postal vote on a special resolution to appoint Mehta as president for three years until January 30, 2026.

Mehta, chairman and CEO of SPM Capital Advisors, a boutique business advisory and consulting firm, was previously chairman of Yes Bank on the government-appointed board. From March 2017 to February 2020, Mehta, a seasoned veteran of the insurance sector, served as non-executive chairman of Punjab National Bank.

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