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Published: Apr 15, 2023
Updated: Apr 15, 2023

LIC raises stakes in four Adani Group companies despite sell-off triggered by short seller report

Life Insurance Corporation of India (LIC), the largest investor in public markets in India, has increased its stakes in four Adani Group companies despite a sell-off crisis triggered by a damning report from US-based short seller Hindenburg Research. While most mutual funds have trimmed their stakes in Adani Group companies, LIC has upped its stakes in Adani Green Energy, Adani Total Gas, Adani Enterprises, and Adani Transmission during the March quarter. However, the insurer has trimmed its stakes in Ambuja Cements and Adani Ports & Special Economic Zone.

LIC's Stakes in Adani Group Companies

LIC has raised its stake in Adani Enterprises from 4.23% in the December quarter to 4.26% at the end of March. In Adani Green Energy, the institutional investor now owns 2,14,70,716 shares, representing a 1.36% stake, up from 1.28% at the end of December 2022. LIC also increased its stake in Adani Total Gas by 6 basis points to 6.02% in March from 5.96% in the previous quarter. Similarly, the insurer's stake in Adani Transmission grew by 3 basis points sequentially, from 3.65% to 3.68%.

LIC's Debt Exposure in Adani Group Companies

LIC's debt exposure in Adani Group companies fell marginally to ₹6,183 crore as of 5 March from ₹6,347 crore as of 31 December 2022, according to Finance Minister Nirmala Sitharaman. The insurer has a debt exposure of ₹5,388.60 crore in Adani Ports and SEZ as of 5 March. The exposure in Adani Power (Mundra) was ₹266 crore, Adani Power Maharashtra Ltd - Phase I ( ₹81.60 crore), Adani Power Maharashtra Ltd - Phase III ( ₹254.87 crore), Raigarh Energy Generation Ltd ( ₹45 crore), and Raipur Energen Ltd ( ₹145.67 crore).

Impact of Hindenburg Report

In January, Hindenburg Research made a litany of allegations, including fraudulent transactions and share-price manipulation, against the Adani Group, causing shares of group companies to plummet. The group has denied the charges, saying it complies with all laws and disclosure requirements.

LIC's move to increase stakes reflects the confidence and faith imposed in Adani Group

Despite the sell-off triggered by the Hindenburg report, LIC has shown its faith in Adani Group companies by increasing its stakes in four of them. The insurer's decision may indicate that it sees value in the Adani Group, despite the controversy.