Image Courtesy: GG India

A rise in the stocks of Indian billionaire Gautam Adani’s enterprises has added about $43 billion to his wealth this year, propelling him to the second-richest person in Asia. According to some observers, the gains are loaded with risk.

This year, Adani’s net worth of $76.7 billion was boosted by a 330 percent gain in Adani Total Gas Ltd., a 235 percent gain in his conglomerate’s flagship Adani Enterprises Ltd., and a 263 percent gain in Adani Transmission Ltd. After reviewing technical indicators, Bloomberg Intelligence analysts Gaurav Patankar and Nitin Chanduka said in a June 10 report that Adani group equities, particularly these three, “look extended.”

“Among the biggest foreign investors are a few Mauritius-based funds holding over 95% of assets in these companies,” the analysts wrote. “Such concentrated positions, along with negligible onshore ownership, create asymmetric risk-reward as large investors conspicuously avoid Adani.”

The research highlights the risk of Adani’s strong wealth growth in 2021, which outperformed the gains of Warren Buffett and his compatriot Mukesh Ambani. An Adani Group official declined to comment immediately.

The overseas funds own a big portion of the shares, essentially decreasing the public float and making the equities volatile, according to the experts. According to Bloomberg Intelligence statistics, Elara India Opportunities Fund, Apms Investment Fund, Cresta Fund, Albula Investment Fund, Lts Investment, and Asia Investment Corp. have invested more than 95 percent of their assets in Adani group enterprises.

The ports-to-power conglomerate also received a boost last month when MSCI Inc. included three more Adani businesses to its India benchmark index, bringing the group’s total presence to five. As a result, investors who follow this index are obligated to purchase.

“Adani stocks trade 150%-200% above their 200-day moving averages, and statistically look extended,” Bloomberg Intelligence analysts reported. “Tesla was 126% above the 200-day when it peaked this year.”


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