There has been a tremendous jump in the shares of Adani Group in a year, why the questions being raised

The shares of 6 companies of the Adani Group have risen from 122 to 819 percent between January 2020 and June 11, 2021, while the Sensex and Nifty have gained 27 to 30 percent during this period.

Shares of Adani Group have been showing volatility in recent times, but in the last one year, there has been a tremendous jump in the shares of this group. Due to this, the net worth of Adani Group Chairman Gautam Adani has also increased tremendously in a year.

Some experts are looking at this huge increase in the shares of Adani Group with skepticism. Adani Group has 6 companies listed in the stock exchange. The shares of five of these companies had increased 10 times in a year till June 11. Apart from Adani Power, the market cap of each company had crossed Rs 1.7 lakh crore by June 11. The market cap of all the six companies crossed Rs 9.5 lakh crore.

Due to this, Gautam Adani became the second richest person in Asia. His own net worth also increased to $77 billion. But on June 14, a news report about NSDL’s action on FPIs investing in the Adani group hurt its shares. Since then, its shares have shown volatility.

Unusual jump!
The huge jump in the shares of Adani Group in the last one year is unusual. In the group’s shares, its shares have risen from 122 to 819 percent between January 2020 and June 11, 2021, while the Sensex and Nifty have gained 27 to 30 percent respectively during this period.

There is no response from the Adani Group yet to the questions asked by our partner website Business Today in this regard. But the reason that emerges from the recent statements of the group, it seems that due to the tremendous performance of the group companies in the last one year, the share prices are going up. Adani Ports & SEZ has handled 247 MT of cargo, showing an annual growth of three times higher than its industry average. Similarly, the financial performance of other companies has been good.

But industry experts are not able to digest such a jump in Adani’s shares and they are questioning the rise of group companies. The valuation of the group declined by nearly Rs 1 lakh crore after media reports of NSDL freezing the accounts of FPIs investing in the Adani group. This is when both Adani and NSDL called the news baseless. After this, within just four days from June 14 to June 17, Gautam Adani’s own net worth dropped by $ 10 billion and he slipped from second to third place in the list of rich people in Asia.

Some experts say that this fall in the share price is justified, as the group companies were significantly overvalued compared to their peers. For example, the shares of Adani Power, Adani Green Energy, Adani Transmission have gained 200 to 600 per cent in the last one year. Their market cap in total reached close to Rs 4 lakh crore.

On the other hand, Tata Power Company (TPCL), which is active in these three businesses, has gained about 200 percent in a year, but its market cap was only 40 thousand crores. Similarly, the stock of JSW Energy gained 235 per cent and its market cap was only Rs 27,000 crore.

Questionable trend
We are concerned about this trend in which promoters along with some of their friends and friendly associations increase the demand for shares of preferred companies. A stock exchange operator said, “Generally, promoters encourage their friendly organizations to invest in their companies by offering them certain returns. If there is a loss due to the purchase of these shares, then the promoters also compensate for it.

Sanjay Sethi, managing partner, Nestor Capital Consulting, believes that much of the movement in the shares of Adani group companies is due to the hard mentality of small investors. However, he says, ‘The market feels that the Adani group companies are well funded and this group is among the biggest buyers of infrastructure assets even in the slow market.’

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