Gautam Adani – India’s richest, and world’s third richest person – is all set to get another major boost to his wealth as Adani Enterprises will enter the benchmark Nifty50 index from September 30.
Adani Enterprises will replace Shree Cements, a leading cement maker which owns brands like Bangur Cement, Bangur Power, Shree Jung Rodhak, among others.
It will be the second Adani group company to make it to the benchmark Nifty50 index, with the first being Adani Ports & SEZ, which was added earlier this year.
According to analysts, this could result in an increased institutional buying in the Adani Enterprises stock.
A report by Edelweiss Securities suggests that this could result in an inflow of $213 million (approx. ₹1,700 crore), while ICICI Securities pegged this number at ₹1,760 crore.
“This change will result in buying worth ₹1,760 crore – fives times the average daily turnover or ADTO for Adani Enterprises and selling worth ₹630 crore or six times the ADTO for Shree Cement from Nifty50 ETF funds,” ICICI Securities said in its report.
Another analysis by IIFL Securities pegs this number at $180 million (approx. ₹1,500 crore).
“With inclusion in the Nifty 50, this will be one of the high beta stocks in the Nifty50 and will play a decisive role in the returns of the Nifty, particularly if there are large swings in the stock price,” Pranit Arora, co-founder and CEO, Univest, told Business Insider India.
‘Over-leveraged’ concerns manageable, says Arora
In August, a report by CreditSights outlined that the Adani Group is “deeply over-leveraged”, resulting in a temporary meltdown in the group’s seven listed stocks, wiping out ₹94,000 crore investor wealth in a day.
According to Arora, this risk is manageable.
“While a lot of analysts caution about the company being over-leveraged being a risk factor for investors, the mix of brick and mortar as well as new age businesses gives the company an edge in terms of balancing risk,” he told Business Insider India.
Adani Enterprises is the flagship Adani Group company and has business interests ranging from mining, edible oil, solar, agro, defense and aerospace, among others. It has a market capitalization of ₹3.94 lakh crore and has almost doubled investor wealth in 2022.