Adani Group's Market Value Soars $43 Billion In A Month: Five Tailwinds Driving The Surge

The Adani Group stocks have added over $43 billion since November to take its market cap at Rs 13.85 lakh crore, leading the charge in an equity market that has shattered records.

While the vindication of the group's stance in the aftermath of the Hindenberg allegations at the Supreme Court’s hearing in November has played a part, it is only one of several tailwinds that have bolstered investor interest.

Here’s a look at the five factors at play:

U.S. Government’s Clean Chit

Close to a month ago, the U.S. International Development Finance Corporation, a U.S. government agency, announced a $553 million investment in Adani Ports’ deep-water container terminal project in Colombo.

On Tuesday, Bloomberg reported, quoting an unnamed senior official, that the U.S. government concluded that Hindenberg Research’s allegations of corporate fraud against the Adani Group were not relevant, before its development finance agency extended the funding for the Colombo project.

Supreme Court Upholds Confidence In SEBI

On Nov. 24, the Supreme Court reserved judgement on multiple public interest lawsuits that alleged contempt of court against market regulator Securities and Exchange Board of India in relation to its investigation into the allegations made by short seller Hindenberg.

During the hearing, Chief Justice DY Chandrachud emphasised that the apex court could not proceed under the assumption that the allegations made in the report were inherently true.

"We don't have to accept the Hindenburg report as ipso facto factually correct. That is why we asked SEBI to investigate," he said.

The Adani Group has maintained repeatedly that the Hindenberg report contained regurgitated allegations and had a “selective and manipulative presentation of matters already in the public domain to create a false narrative”.

Rs 7 Lakh Crore Capex Plan

The Adani Group will spend Rs 7 lakh crore as capital expenditure over the next decade as it seeks to expand its predominant area of business – infrastructure.

A recent presentation made by the group’s Chief Financial Officer Jugeshinder Singh laid out the road map for six companies – from power and ports to airport – to tap the bond market to fund the expansion. As much as 80% of the funding requirements will be met through debt issuances in global capital markets and the rest will come from domestic sources, he said.

What’s more, Singh highlighted the group’s intention to focus on capital efficiency and on growing its infrastructure businesses, which have traditionally enjoyed higher margins, rather than its fast-moving consumer goods business.

Foreign Funding For Adani Green Energy

In the latest development, Adani Green Energy on Tuesday raised $1.36 billion in funding through a construction facility from international banks in one of the largest project finance deals in Asia. The funding was part of the company’s plans to raise $3 billion.

The senior debt facility is a green loan offered by a consortium of eight international banks including BNP Paribas, Cooperatieve Rabobank U.A., DBS Bank Ltd., Intesa Sanpaolo S.p.A., MUFG Bank, Ltd., Societe Generale, Standard Chartered Bank and Sumitomo Mitsui Banking Corp. The financing has been certified by second party opinion provider Sustainalytics.

The funds will be used to develop the world’s largest renewable energy park at Khavda in Gujarat, according to a company statement. The company plans to set up renewable energy capacity of 2,167 MW at the location.

The Ruling Party’s Hattrick In Assembly Elections

The Bharatiya Janata Party’s unprecedented victory in three out of the five recently concluded state assembly elections gave India’s equity market a shot in the arm, pushing it to fresh record highs. The BJP’s convincing win, including in Chattisgarh, where it was slated to come in second, has erased concerns about its performance in the Lok Sabha election that is just around the corner.  

Analysts have said that investors awaiting clarity are likely to start deploying their money. Indeed, just over the past week, the benchmark Nifty 50 has risen close to 800 points, or 4%. A win for the BJP in the general election next year is seen as a positive from the perspective of policy continuity, particularly in the arena of infrastructure development.

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