Gautam Adani-Hindenburg issue: Ahead of Adani Enterprises FPO opening, short seller publishes report raising concerns over debt position of Adani group companies
Gautam Adani-Hindenburg issue: Selling in Adani Enterprises shares and other Adani group shares has stopped after a US-based short seller raised 86 queries from the Adani group and concerns over the debt position of Adani group companies, state insurer Life Expressed. Insurance Corporation of India (LIC) and State Bank for their investments and credit exposure in companies owned by Gautam Adani.
According to stock market experts, LIC is sitting with a profit on its investment of around ₹30,000 crore, despite heavy selling in Adani group shares, while SBI has already declared that its loan exposure in Adani group companies It accounts for about 0.90 per cent of its total debt. Book. He said that SBI can recover its loan exposure in Adani Group in 9-10 months as their ROE is more than 10 per cent, if Adani Group fails to stand up against Hindenburg Research's allegations in its report. Similarly, he said that LIC has cash of ₹26,000 crore and unclaimed amount of ₹21,000 crore. Therefore, if LIC's investment in Adani Group shares becomes zero, in that case it can repay the public money using the cash in hand and the unclaimed amount with it.
Speaking on whether public money is safe in SBI and LIC after the Adani-Hindenburg saga, Santosh Meena, head of research at Swastika Investmart, said, "Despite their exposure to the Adani group, SBI and LIC investors are not worried." Should be. If we talk about SBI, it has exposure to Adani group companies around 0.88% of its total loan book, which is small, while the management is confident that this exposure is backed by strong cash flows.Banking Sector The overall outlook is positive, and SBI is an ideal bet for the capex theme in India."
Speaking on the recent Adani-Hindenburg controversy and its impact on LIC and SBI, Avinash Gorakshkar, Head of Research, Profitmart Securities, said, "LIC has announced that its investment in Adani Group shares is around ₹30,000 crore, while It has the full value of its investment. Adani Group shares are worth around ₹40,000 crore. Therefore, LIC is sitting on a one-third return on its investment in Adani Group shares over the past few years. If Adani Group shares continue to fall , then in that case LIC has about ₹26,000 crore cash in hand to pay the claim amount of its customers. The insurance giant also has an unclaimed amount of about ₹21,000 crore. So, in total, It has over Rs 45,000 crore of cash in hand to tide over the crisis if its investment stock in Adani Group turns zero."
Avinash Gorakshkar further said that in the case of SBI, India's largest commercial bank has already declared that its credit exposure to LIC is less than one per cent of its total loan book. Today, the ROE of SBI is more than 10 per cent. So, if Adani group fails to repay its loan to SBI, then in that case, the state-owned bank will be able to come out of this NPA within 9-10 months.
Comparing the position of LIC and SBI in the current Adani-Hindenburg crisis, Santosh Meena of Swastika Investmart said, "If we look at LIC, it is a bit riskier than SBI as 1% of its total AUM is owned by Adani Group Although the cost of acquisition is low, further fall in Adani Group shares could lead to further weakness in this stock while the insurance sector itself is facing policy challenges.LIC stock has already fallen Hence, long-term investors should not panic; however, near-term volatility cannot be ruled out."
Following the publication of the Hindenburg Research report ahead of the Adani Enterprises FPO, bond prices of Adani Ports and Adani Green, maturing in 2024, have also led to a sharp fall in Adani Group shares. It has raised concerns over public money being pumped into Adani group companies by SBI and LIC.
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