Buying the dip? MFs lap up Adani Ports stocks in Jan; sell 4 other group cos

The massive sell-off in Adani Group stocks in late January triggered by the negative report of US-based Hindenburg Research saw mutual funds selling some of them, but mostly using the dip to accumulate Adani Ports and Special Economic Zone.

Adani Ports was among the top large-cap stocks bought by mutual funds in January. However, they sold Adani Enterprises, Adani Green Energy, Adani Transmission, and Ambuja Cements, data collated by brokerage ICICIdirect showed.

MFs cumulatively bought 10.4 crore shares of Adani Ports last month for Rs 6,355 crore. However, they sold 1.2 crore shares of Adani Enterprises and 14.8 crore shares of Ambuja Cements.


Allegations of corporate misgovernance, stock price manipulation, rising risks of highly leveraged books of some of the group companies, among others, by the American whistleblower created a ruckus on Dalal Street.

Between January 25 and February 2, shares of Adani Ports fell over 35%, Adani Enterprises by 54%, Adani Green Energy 44%, Adani Transmission 38%, and Ambuja Cements by over 23%.


In trade on Tuesday, shares of Adani Ports were up 1.6% at Rs 562.90, but Adani Enterprises was down over 1% at Rs 1,692.70.

The sharp erosion in share value forced Adani to withdraw the Rs 20,000-crore follow-on public offer of Adani Enterprises despite it being fully subscribed.

The bloodbath wasn’t only in equities, but also in bond markets, as Credit Suisse and Citigroup stopped accepting the commercial papers of some of the group firms as collateral.

Despite the sell-off, the analyst community did not tweak their earnings growth estimates or the price target for Adani Ports as the company’s business outlook and cash flows remain positive.

Last week, Moody’s Investors Service downgraded the outlook on 4 Adani Group firms but it retained its rating and outlook on Adani Ports.

Moody’s believes that Adani Ports can generate relatively steady cash flow over the next 12-18 months and can realign its capital spending plans in the event of a liquidity squeeze.

Post the December quarter earnings, Adani Ports had also assured analysts that its top priority is to deleverage its balance sheet and prepay loans worth Rs 5,000 crore in FY24. The company aims to bring down its debt-to-EBITDA ratio to 2.5 times by the end of FY24.

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