Mutual Funds Reduce Holdings in Adani Group Amid Ongoing Concerns:

Suspense crime, Digital Desk : Mutual funds have shown a continued pattern of divesting from Adani Group companies, indicating a more cautious approach that was observed in the earlier part of the year. In the month of April itself, mutual funds offloaded stocks worth more than ₹1,160 crore across eight listed Adani companies.

In the month of April, the number of companies with declining shareholding increased to seven, signifying a heightening disengagement from fund managers as compared to March, where only four companies experienced a decrease in holdings.

The major losses were taken from Adani Enterprises, which alone accounted for 346 crore of losses. This was followed buy Adani Energy Solutions which lost 302 crore and Ambuja Cements which lost 241 crore.

Other noted divestments include:

ACC: 124 crore
Adani Ports & SEZ: 7.7 crore
Adani Total Gas: 3.43 crore

The only noted increase in investment came from Adani Power where mutual funds increased investment by 102 crore.

This trend of decreased investment shown by mutual funds stems from a more cautious approach outlined in March where the majority of Adani Group stocks faced net selling. Further, in February, there was a noted Rs 321 crore share sell off. Even more concerning is the limited purchasing activity from mutual funds which was only 480 crore in the month of January.

Market analysts link the ongoing pullback to an assortment of risk factors that include the following:

Barriers to entry for new companies

Soaring stock valuations

Increased attention from regulatory authorities

Sector specific risk concerns

Funds with reserved mandates seem particularly spooked. They point to the group’s record of volatility and sketchy financial reporting as primary concerns.

Fire Sale Valuations Trigger Portfolio Shifts

Portfolio managers deem the valuation gap as reason enough to reduce exposure citing fund manager reluctance to the high operational cost and aggressive premiums. Adani group stocks are not just overexposed, many are overpriced and fund managers straddle forward guidance revising downward leading to eroded earnings visibility and depressed valuation metrics.

Legal drama continues to unfold in the US with separate talks reportedly still ongoing.

In the interim, Bloomberg News has provided coverage detailing that Gautam Adani and his aides have engaged in discussions with officials operating under the power of Donald Trump. The objective has been eliminating criminal claims connected to an international bribery probe.

These discussions are said to have commenced earlier this year. Adani’s team claims the charges run counter to prevailing America-first policies and as such extenuating circumstances for domestic charge trumping would beg reconsideration. If things remain on this trajectory a settlement could be struck in a month’s time.