A $ 43 billion jump in Adani’s fortune is fraught with many risks

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A $ 43 billion jump in Adani's fortune is fraught with many risks


NEW DELHI: A rally in shares of companies controlled by Indian billionaire Gautam adani has added nearly $ 43 billion to his wealth this year, catapulting him to the place of the second richest person in Asia. Some analysts say the earnings are fraught with risk.
Adani’s net worth of $ 76.7 billion was boosted by a 330% increase in Adani Total Gas Ltd, a 235% increase in his conglomerate flagship Adani Enterprises Ltd and a 263% increase in Adani. Transmission Ltd this year. Adani Group The stocks, especially these three, “seem spread out,” Bloomberg Intelligence analysts Gaurav Patankar and Nitin Chanduka wrote in a June 10 note after analyzing technical indicators.
“Among the largest foreign investors are some Mauritius-based funds that own more than 95% of the assets of these companies,” the analysts wrote. “These concentrated positions, coupled with negligible onshore ownership, create an asymmetric risk reward as large investors conspicuously avoid Adani.”
The analysis underscores the vulnerability of the rapid rise in wealth that Adani has seen in 2021, outpacing the gains of Warren buffett and his compatriot Mukesh Ambani. A representative for the Adani Group declined to comment immediately.
Foreign funds hold a large chunk of the shares, effectively reducing the public float and leaving the shares prone to volatility, the analysts wrote. Elara India Opportunities Fund, Apms Investment Fund, Cresta Fund, Albula Investment Fund, Lts Investment and Asia Investment Corp have put more than 95% of their assets in Adani group companies, according to data compiled by Bloomberg Intelligence.
The ports-to-energy conglomerate also got a boost after MSCI Inc included three more Adani firms in its benchmark of India last month, bringing the group’s total footprint to five. This leads to compulsory purchases by investors who follow this index.
“Adani’s stock is trading 150 to 200% above the 200-day moving averages, and statistically stretched out,” wrote analysts at Bloomberg Intelligence. “Tesla was 126% above 200 days when it peaked this year.”

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