The investments made in the Adani group companies by state-run insurance giant Life Insurance Corporation of India (LIC) have turned negative as of closing on February 23, according to data analysed from stakes held by the insurance company as per the December shareholding pattern made available on the exchanges.
If some Adani stocks do not find support soon, LIC’s investment in the beleaguered Group, whose listed companies’ share prices have fallen by up to 80 percent, will almost certainly turn negative, as combined profit has now fallen to around Rs 3,000 crore from Rs 53,000 crore profit since the beginning of this year.
Following a sell-off in Adani stocks following the Hindenburg Research report, the combined market value of LIC’s investments in Adani Group was Rs 33,000 crore on February 23, down from nearly Rs 83,000 crore on December 31, 2022. When Hindenburg published its damning report on January 24, the LIC’s investment in Adani Cos was valued at Rs 81,000 crore.
This is primarily due to the significant sell-off in Adani Group stocks.
After the publication of the Hindenburg report, LIC declared on January 30 that at the end of December, it owned Rs 35,917 crores under equity and debt in Adani Group equities.
Since the US-based short seller Hindenburg released their research a month ago alleging accounting fraud and stock manipulation, the market value of the group’s 10 listed firms has fallen by $146 billion, or approximately 60 percent. Adani has refuted the charges.
With the decline on Thursday, LIC’s investments now have a negative value or a loss. It is assumed that after January 30, LIC has not acquired or disposed of any stock in the Group entities.
LIC owns between 1.28 percent and 9.14 percent of the shares in seven publicly traded Adani companies.
The value of LIC’s investment in Adani Ports (APSEZ), in which it owns more than 9 percent, has fallen from Rs 15,000 crore on January 24 to slightly less than Rs 11,000 crore on February 23. Similarly, the value of its 4.23 percent stake in Adani Enterprises has decreased from Rs 16,500 crore to Rs 6,660 crore over the same time period. LIC also owns slightly less than 6 percent of Adani Total Gas.
Since this Adani stock has dropped nearly 80 percent in the last month, LIC’s investment value has dropped from Rs 25,500 crore on January 24 to around Rs 5,200 crore.
LIC holds 3.65 percent of Adani Transmission and 1.28 percent of Adani Green. In one month, the shares of both companies fell 73 percent. The LIC’s investment in Adani Transmission is now valued at Rs 3,000 crore, while the investment in Adani Green is valued at around Rs 1,000 crore. The loss suffered by LIC in Ambuja Cement and ACC is not severe.
According to LIC, its total exposure in Adani Group companies amounts to 0.975 percent of its total assets under management (AUM) at book value.
Meanwhile, most Adani stocks closed with significant losses on Thursday. In one month, the Group’s market capitalisation has dropped by approximately Rs 12 lakh crore.
The stock market’s fallout has resulted in a sharp decline in Gautam Adani’s wealth, which now stands at $42.7 billion, according to the Bloomberg Billionaires index. He has dropped to 29th place on the world’s wealthiest list, down from second place last year.
Gautam Adani is the founder of the Ahmedabad-based conglomerate Adani Group. Infrastructure, commodities, power generation, transmission, real estate, and cement are all areas of interest for the group.
