GQG gets its Adani investment bang on target

Adani Group has finally seen light at the end of the tunnel

Just about 75 days back, GQG Partners (founded by Rajiv Jain) had invested a huge Rs15,446 crore in a 4 Adani group companies viz. Adani Green Energy, Adani Ports, Adani Transmission and Adani Enterprises. Rajiv Jain of GQG Partners manages close to $92 billion in assets in global and emerging markets equities funds. But, the brave investment bet that GQG made in the Adani group stocks appears to have paid. The investment of Rs15,446 crore or $1.9 billion has appreciated by nearly 49% in just 75 days. Not surprisingly, Rajiv Jain appears to be laughing all the way to the bank. 

Ezekiel 25:17

This is just one of many examples of investors who have started earning gains on Adani investments for the first time post the publication of the Hindenburg Research Report. Gautam Adani must have taken heavy inspiration from the Bible, Ezekiel 25:17, “Blessed is he who, shepherds the weak through the valley of the darkness. For he is truly his brother's keeper and the finder of lost children. And I will strike down upon thee with great vengeance and furious anger those who attempt to poison and destroy my brothers. And you will know I am the Lord when I lay my vengeance upon thee." That may sound tad too lyrical, but captures the gist of the Adani group bouncing back.

Big bounce with the Supreme Court ruling

The shares of the Adani Group flagships saw glad tidings on Monday, a day after the Supreme Court’s six-member committee made its 178-page order declassified. In particular, the market value surpassed the Rs 10-trillion mark, with stock price of Adani Wilmar rallying 10% to Rs444.4, Adani Enterprises gaining 18.8% to Rs2,325 and Adani Ports & SEZ rising by 6% to Rs729. As per the report, while a clean chit has not been provided to the Adani Group, there has not been any evidence to prove the contrary, regarding wrongdoings in Adani’s modus operandi including allegations of price manipulation and disclosures of third-party transactions. 

The Hindenburg Report, which was released just prior to Adani’s FPO, had caused huge market cap loss. At one point, the market cap of the group had lost close to $130 billion from the peak levels, although it is a lot better today. Adani flagship stocks had nosedived due to its strong allegations against Adani’s tax havens, price manipulation and debt exposures. However, the Supreme Court Panel’s verdict comes as a sense of relief to individual and institutional investors in the Adani group. While it does not comment on the content of the report, the court is satisfied that the market reaction was entirely normal.

Will the GQG gains sustain at these levels

To the credit of the Adani group, they have used the crisis to put things in order. They have cut down on their aggressive capex plans and focused on cutting debt. In the process, it has released billions of dollars of pledged shares, reducing the volatility risk for the stock. This included the debt taken to bankroll the acquisition of Ambuja Cement. These moves have instilled confidence in investors that the Adani Group is in it for the long haul. Whether GQG makes more profits from these levels would largely depend on how these stocks on the valuation front. Buying in a crisis is never easy; and Rajiv Jain of GQG did exactly that. In a sense, he is entitled to laugh all the way to the bank.

Content Source: Financial Express