Clarification by company, noticeable buying in select index majors helps recovery by day-end
Amid reports that the National Securities Depository Ltd (NSDL) has frozen accounts of certain FPIs that have holdings in some Adani Group companies, shares of these companies got a massive drubbing in morning trade on Monday, tumbling by up to 25 per cent.
According to media reports, NSDL has frozen the accounts of three foreign funds which together own shares in four Adani Group companies. These accounts were frozen on or before May 31, the report added.
Soon afterwards, billionaire Gautam Adani’s group released a statement saying accounts of three foreign funds that are among its top shareholders are not frozen and reports to the contrary are “blatantly erroneous and misleading”.
In identical filings to the stock exchanges, conglomerate flagship Adani Enterprises as well as Adani Ports and Special Economic Zone, Adani Green Energy Ltd, Adani Transmission Ltd, Adani Power and Adani Total Gas Ltd said the reports of NSDL freezing accounts of Albula Investment Fund, Cresta Fund and APMS Investment Fund that hold shares in their group firms were “done to deliberately mislead the investing community”. “This is causing irreparable loss of economic value to investors at large and reputation of the group,” they said.
Given the seriousness of the issue and its consequential adverse impact on minority investors, “we requested Registrar and Transfer Agent, with respect to the status of Demat Account(s) of aforesaid funds, and have their written confirmation vide its e-mail dated 14th June, 2021, clarifying that Demat Account(s) in which the aforesaid funds hold shares of the company, are not frozen,” the firms said.
The NSDL website, however, continued to show the accounts of Albula Investment Fund, Cresta Fund and APMS Investment Fund as being frozen, without citing a reason. It listed Albula Investment Fund Ltd (PAN No. AAHCA3597Q), APMS Investment Fund Ltd (PAN No. AAECM5148A) and Cresta Fund Ltd (PAN No. AADCC2634A) as “account level freeze”.
A source at the group, however, said the Registrar has stated in writing that accounts that hold Adani Group stocks have not been frozen.
The three funds feature among the top 12 investors and own about 2.1-8.91 per cent stakes in five Adani group companies as of March 31, 2020, according to annual investor presentations. The value of their holding in the five Adani group firms is valued at $7.78 billion, before the stocks witnessed mayhem on Monday.
Later in a statement, the ports-to-energy conglomerate said the FPIs (Foreign Portfolio Investors) in question have been investors in Adani Enterprises Ltd for more than a decade.
“Demergers (which led to creation of separate firms holding businesses such as power, renewable and city gas) have resulted in ownership mirroring in the portfolio companies,” it said.
“All our businesses were incubated by the flagship company Adani Enterprises Ltd, which was established in 1994. During the last seven years, Adani Ports, Adani Transmission, Adani Green Energy and Adani Gas Ltd were demerged and listed on Indian Exchanges,” the statement said.
The port business is with Adani Ports & Special Economic Zones Ltd, while renewable firm Adani Green Energy Ltd (AGEL) has contracted capacity of 25 GW and is ranked the largest solar power developer in the world. Adani Transmission Ltd operates the largest private transmission network in India of over 17,000 ckm and Adani Total Gas Ltd has license to retail city gas in 38 geographical areas.
“Adani Enterprises Limited continues to nurture new businesses such as airports, roads, data centre, solar manufacturing and offers immense value to the investors when these entities get listed separately,” the statement said.
“Adani portfolio continues its journey of exponential growth across all verticals thus ensuring immense value to its stakeholders. We urge all our stakeholders not to be perturbed by market speculations,” it said.
Following the statement, shares of some of the group firms witnessed partial recovery from their early losses.
Adani Enterprises closed the day 6.26 per cent lower at Rs 1,501.25, while Adani Ports and Special Economic Zone tumbled 8.36 per cent to close at Rs 768.70 on the BSE.
During morning trade, Adani Enterprises had tanked 24.99 per cent to Rs 1,201.10, while Adani Ports dived 18.75 per cent to Rs 681.50.
Among others, Adani Green Energy dipped 4.13 per cent to close at Rs 1,175.95, Adani Total Gas fell 5 per cent to Rs 1,544.55, Adani Transmission declined 5 per cent to Rs 1,517.25 and Adani Power slumped 4.99 per cent to Rs 140.90.
All these stocks hit their respective lower circuit limits during the trade.
“Initially, a news report on the Adani Group triggered a weak start. But the benchmark gradually recovered as the day progressed, thanks to noticeable buying in select index majors. The clarification by the company further comforted the market and helped the index to close flat,” said Ajit Mishra, VP (research), Religare Broking Ltd.