How Did LIC Gain Profitability By Investing In Adani Group Shares?

Life Insurance Corporation of India has witnessed huge gains by making investments in the Adani Group’s shares. The Adani LIC stakes have surged by 51.6% or INR 22,591 crore. It has reached a valuation of INR 66,388 crore. This is a remarkable increase in its profit value. The value compares to INR 43,797 crore as of May 31st last year. This is an incredible win for the Adani Group. Because of this, the Adani Group has been able to acquire the trust of the investors. The insurance company had also strategically reduced its shares in some of the Adani Group companies to capitalise on the rise in share prices.

LIC’s Shares In Adani Group of Companies

Adani LIC has reduced its stake in Adani Enterprises over the past year. The company also made a strategic decision to finally reduce its holdings in Adani Ports from 9.1% to 7.86 %. It even decreased its stakes in Ambuja Cements from 6.3% to 5.69%. Despite all these reductions, LIC’s investment values in the Adani Group companies have increased substantially, causing the company to win an excellent return on its investment.

The Adani Group’s ten listed companies added around INR 8,400 crore to their market capitalisation, bringing their total market capitalisation to INR 17.9 trillion. This is the highest value recorded since the Hindenburg Research report was released. This allowed the company to enjoy excellent profitability and take its business to new heights.

The Effect of the Hindenburg Report

The Hindenburg Report was one of the biggest blows to the Adani Group’s business. It caused the firm’s share values to come down drastically. Many investors even lost their faith in the Adani Group. Investigations continued for over 12 months. However, no strong proof was found against the firm. This ultimately caused the Supreme Court to drop all charges against the Adani Group, and the conglomerate was once again back in business.

After the Hindenburg report, the Adani Group started selling its shares to different foreign investors. GQG Partners, IHC of Abu Dhabi, and Qatar Investment Authority were major investors. The values of the shares owned by these three foreign investors have doubled within a year. The values of the domestic institutional investors’ stakes in the Adani Group company also rose dramatically. In fact, the value increased from INR 20,688 crore in May last year to INR 47,792 crore this year. This indicates a 131% growth in the year. This shows Adani Group’s resilience even in challenging situations.

This business group also experienced a 40% year-on-year growth in earnings before interest, tax and amortisation. The company focused on containing debt and reducing the founders’ share pledges, which brought about an extraordinary improvement in its business operations. It was also able to attract many more investors to its various businesses, including both national and global investors.

The Recent Investments

Adani Enterprises is investing in airports and green hydrogen businesses. The company is trying to scale its captive manufacturing capacity towards green hydrogen production. It has started commissioning the Navi Mumbai Airport. Ambuja Cements is planning to double its current capacity by 2030. This will again boost our country’s infrastructure business. Our country will also be able to achieve economic stability,

Adani Ports also released its five-year business plan to acquire control over some of the major ports across the world. It is also aiming for an 18% annual ebitda growth from FY24 to 29. Adani Green is planning to raise its power capacity target by 2030. This includes 5 GW of energy generated from its hydro projects. Adani Total Gas is also planning to expand its business segment. It aims to invest a substantial amount of money in the mining sector. There are elaborate plans to put more focus on the company’s EV business as well.

Conclusion

By investing in Adani Group’s shares, Adani LIC has achieved excellent profitability for its business. The Adani Group also gained investors’ trust after the Hindenburg crisis.