Hindenburg fallout: LIC share price tanks 17% in a month, shareholding value in Adani stocks drops ₹48,600 cr

In the aftermath of the the Hindenburg Research report revelations,  Adani Group’s stocks took a huge beating on the Dalal Street, but they were not the only ones to bear the brunt. India’s largest insurer LIC has also seen a significant impact for its large exposure towards Adani firms. The insurer’s stock has taken a massive blow since the Hindenburg accused Gautam Adani and his port-to-energy empire of stock manipulation and frauds. In a month, the LIC stock has nosedived by nearly 17% on Dalal Street and its shareholding value in Adani stocks has declined by more than ₹48,600 crore.

As per BSE data, LIC held 4,81,74,654 equity shares, or 4.23%, in the group’s flagship firm Adani Enterprises as on December 31, 2022. The government-owned life insurer held 4,06,76,207 equity shares, or 3.65% stake, in Adani Transmission during the same quarter; 6,55,88,170 equity shares, or 5.96%, in Adani Total Gas; and 2,03,09,080 equity shares or 1.28% in Adani Green Energy.

LIC also has some exposure to Adani’s cement business. The insurer holds 12,55,89,263 equity shares or 6.33% in Ambuja Cements and 1,20,33,271 equity shares or 6.41% in ACC.

But LIC’s largest holding in Adani-related stocks are in Adani Ports. The insurer has 19,75,26,194 equity shares or 9.14% in Adani Ports.

LIC does not have any holding in Adani Wilmar, Adani Power, and NDTV. 

The data is from BSE and as of December 31, 2022.

Taking into consideration, the market price of Adani stocks on January 24th, LIC’s shareholding in Adani Enterprises was valued at around ₹16585.33 crore; in Adani Ports it was around ₹15,028.78 crore; in Adani Transmission it was ₹11,210.97 crore; in Adani Total Gas it was ₹25,483.96 crore; and in Adani Green Energy it was ₹3,886.24 crore.

While in Ambuja Cements, LIC’s holding valued at around ₹6,261.25 crore, and in ACC around ₹2,811.21 crore.

In total, LIC’s shareholding in Adani stocks as of January 24 was around ₹81,267.75 crore.

But on the same day, things were about to change drastically for Adani’s conglomerate and many would be left baffled. On January 24th, Hindenburg dropped a critical report, alleging that Gautam Adani’s group has committed fraud, stock manipulation, and tax evasion among others.

Hindenburg’s January 24th report said, “we reveal the findings of our 2-year investigation, presenting evidence that the ₹17.8 trillion (U.S. $218 billion) Indian conglomerate Adani Group has engaged in a brazen stock manipulation and accounting fraud scheme over the course of decades.”

The short seller had claimed that the 7 Adani named stocks are more than 85% overvalued.

And then began a series of free falls in Adani stocks. A month later, the panic selling still continues in Adani shares. By end of February 24th, Adani Group’s market value together has slipped by over ₹12 lakh crore in a month.

Before January 24th, Adani stocks together held the alpha seat on stock exchanges with a market valuation of over ₹19 lakh crore, surpassing Mukesh Ambani’s Reliance and Ratan Tata’s TCS.

Why LIC was impacted by the Adani-Hindenburg row? The answer is simple it is because of the exposure LIC has in Adani stocks. Although on January 30th, LIC had stated it has ₹35,917 crore under equity and debt at the end of December in Adani Group stocks. LIC had said, the total purchase value of equity under all Adani group companies is ₹30,127 crore.

By end of February 24th, LIC’s shareholding value in Adani stocks was around ₹32,618.56 crore. Hence, in total, the shareholding value of LIC in Adani stocks declined by ₹48,649.17 crore from January 24 to February 24th.

LIC’s biggest loss would be in Adani Total Gas as its shareholding value dipped by ₹20,541.23 crore in a month. Its shareholding value plunged by ₹10,251.57 crore in Adani Enterprises, ₹3,988.05 crore in Adani Ports, ₹8,315.23 crore in Adani Transmission, ₹2,897.69 crore in Adani Green Energy, ₹1,925.28 crore in Ambuja Cements and by ₹730.12 crore in ACC.

In a month, Adani Enterprises’ share price has tumbled by nearly 62%, Adani Ports dipped over 26.5%, Adani Transmission plunged by over 74%, Adani Total Gas slipped by nearly 81%, and Adani Green Energy by over 74.5%. Ambuja and ACC share prices have also shed nearly 31% and 26%.

Meanwhile, LIC’s share price has plunged by nearly 17%. The stock was around ₹702.20 apiece on January 24 on BSE. But on February 24, the stock declined to ₹584.65 apiece.On Friday, LIC stock was down by a little over 1% and its market cap was nearly ₹3,69,791 crore.As for Adani stocks, 7 out of the total 10 listed securities were in the red on Friday. Adani Enterprises dipped by nearly 5%, while Adani Power froze at a 5% lower circuit. Three Adani stocks namely Adani Green Energy, Adani Total Gas, and Adani Transmission locked at fresh 52-week lows. While Adani Wilmar was down by 3.4%, and media arm NDTV stock plunged over 4%.

The only stocks in green were Adani Ports up by over 1.2%, and Ambuja Cements higher by 2.5%, while ACC was broadly flat on Friday.

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