Adani Enterprises rallies to 1-month high after GQG investment

© Reuters

Ambar Warrick

Investing.com -- Shares of Adani Enterprises Ltd (NS:ADEL), the flagship firm of the Adani Group, surged to a near one-month high on Monday after the Indian conglomerate received a roughly $1.7 billion investment from boutique fund GQG Partners Inc DRC (ASX:GQG).

Adani Enterprises jumped 11.2% to 2,090.95 rupees ($1 = INR81.789), reaching its highest level since early-February. The stock, along with Adani Ports and Special Economic Zone Ltd (NS:APSE), was the best performer on the Nifty 50 benchmark index. The Nifty rose 1% on Monday. 

Other stocks with exposure to the conglomerate, including Axis Bank Ltd (NS:AXBK), Life Insurance Corporation Of India (NS:LIFI), and Ambuja Cements Ltd (NS:ABUJ), also advanced on Monday. 

GQG Partners had purchased the stake on Friday, which consisted of a 3.4% stake in Adani Enterprises, 4.1% in Adani Ports, 2.5% in Adani Transmission Ltd (NS:ADAI), and 3.5% in Adani Green Energy Ltd (NS:ADNA). All of the stocks were up between 2% and 11% on Monday, a second consecutive session of gains. 

The move helped ease some investor fears over Adani’s stretched debt position and also helped companies under the conglomerate recover from a $200B stock rout, which was triggered by a short-seller report from Hindenburg Research. 

The report had noted Adani’s high debt levels, and had also alleged money laundering and stock market manipulation by the Indian conglomerate. Last week, India’s top court asked the country’s securities regulator to investigate the group.

Adani had denied the allegations of the report, with recent reports suggesting the conglomerate is still planning a slew of investor roadshows to drum up sentiment. 

The firm also reportedly secured a $3B loan from a sovereign wealth fund, and was seen courting more debt by putting up some of its Australian coal assets as collateral.

But despite the recent recovery, most shares under Adani are still trading well below levels seen prior to the Hindenburg report. The conglomerate had also canceled a $2.5B share issue in the aftermath of the report.