In a recent development, foreign portfolio investors (FPIs) have trimmed their holdings in several Adani Group companies during the September quarter, as per an analysis of quarterly shareholding patterns updated on the exchanges. These strategic moves come at a time when regulatory scrutiny of the conglomerate has intensified, impacting investor sentiment.
Among the ten Adani Group companies listed on the exchanges, the flagship firm, Adani Enterprises, witnessed the most substantial sequential drop in overseas holdings. FPIs reduced their stake in Adani Enterprises by 4.8 percentage points between July and September, bringing it down to 14.5% as of September 30.
Adani Ports & Special Economic Zone also experienced a reduction in overseas holdings, with its FPI stake declining to 13.8% in September from nearly 17% as of June. Similarly, FPI holdings in cement manufacturer ACC Ltd. dwindled by nearly 3 percentage points to 7.1% as of September 30, based on shareholder data.
|Company||FPI Shareholding In June||FPI Shareholding In September|
|Adani Ports and SEZ||16.99%||13.83%|
|Adani Energy Solutions||19.65%||17.74%|
|Adani Total Gas||14.08%||13.94%|
|Adani Green Energy||18.25%||18.16%|
Notably, half of the ten listed Adani Group companies, including Adani Ports, ACC, Adani Energy Solutions (formerly Adani Transmission), Adani Wilmar, and Adani Total Gas, have observed a decline in FPI holdings since the March quarter. Since March 2023, FPI holdings in Adani Ports and Adani Energy Solutions have decreased by 4.2 and 3.3 percentage points, respectively.
However, the combined FPI holding in these group companies increased marginally to 14% in September from 13.7% in June, primarily due to GQG Partners’ acquisition of an 8.1% stake in Adani Power in a significant block deal in mid-August. This stake purchase involved entities connected to the Adani family, including Worldwide Emerging Market Holding and Afro Asia Trade and Investments Ltd.
With the exception of Adani Power and NDTV, all Adani Group firms registered a decrease in foreign holdings during the September quarter. The decline in FPI interest followed a period of consistent FPI buying in Indian equity markets between March and August.
Regulatory Scrutiny Intensifies
Sources familiar with the matter informed Business Headline that the National Financial Reporting Authority (NFRA) had reached out to all past auditors of the Adani Group, requesting information on more than 100 questions. The NFRA’s inquiries covered a range of issues, including related party transactions, among others. Notably, one of the auditors was asked to provide audit files dating back to the financial year 2022.
The heightened regulatory scrutiny comes in the wake of recent challenges faced by Adani Group stocks, which have witnessed a decline in their overall market capitalization. On Monday, for the first time since May this year, the group’s market capitalization fell below the Rs 10 lakh crore mark. As of the market’s close on Thursday, this figure stood at Rs 9.8 lakh crore.
In addition to the reduction in FPI holdings, these regulatory inquiries have contributed to a climate of uncertainty surrounding Adani Group companies. Investors and stakeholders are closely monitoring the situation as the conglomerate faces continued regulatory scrutiny and prepares to report its September quarter results.
Adani Enterprises to Report September Quarter Results
Amidst these developments, the flagship company of the Adani Group, Adani Enterprises, is gearing up to release its September quarter results on November 2. The market will be closely watching these results for insights into the financial performance and outlook of the conglomerate.
As the situation unfolds, the Adani Group continues to navigate challenges in both the financial and regulatory spheres. The impact of reduced FPI holdings, coupled with ongoing regulatory scrutiny, underscores the need for transparency and accountability in the corporate world.