In its filing, the IHC said that it believes “the inherent strength of airports, data centres, green hydrogen and various other verticals being incubated under Adani Enterprises is poised to uniquely capitalise on India’s robust growth journey”
In a filing to Abu Dhabi stock exchange, IHC said, “This strategic increase reflects IHC’s conviction in the world leading incubation model of AEL”
Days after selling its stake in two of the Adani Group companies, Abu Dhabi-based conglomerate International Holding Company (IHC) on October 3 said it has raised its stake in the group’s flagship Adani Enterprises Ltd to above 5 percent.
In a filing to the Abu Dhabi stock exchange, IHC said, “This strategic increase reflects IHC’s conviction in the world leading incubation model of AEL.”
Stating it has increased its stake in AEL to above 5 percent, it said it believes that “the inherent strength of airports, data centres, green hydrogen and various other verticals being incubated under AEL is poised to uniquely capitalise on India’s robust growth journey.”
“IHC continues to explore unique investment opportunities in India with the goal to maximise stakeholders’ return,” the filing added.
Last week, IHC stated that as part of a “portfolio rebalancing strategy,” it will sell its 1.26 percent stake in Adani Green Energy Ltd and 1.41 percent stake in Adani Energy Solutions.
The combined market valuation of seven of the top-10 most valued firms fell by Rs 77,434.98 crore last week, with ITC and HDFC Bank taking the biggest hit, in-line with a muted trend in equities. Last week, the BSE benchmark fell by 524.06 points or 0.78 per cent.
While Reliance Industries, HDFC Bank, Tata Consultancy Services (TCS), ICICI Bank, Hindustan Unilever, ITC and Bajaj Finance Limited were the main laggards in the top-10 pack, Infosys, State Bank of India and Bharti Airtel made gains in their market capitalisation (mcap).
The valuation of ITC fell by Rs 26,192.05 crore to Rs 5,83,732.19 crore.
HDFC Bank’s mcap declined by Rs 22,747.89 crore to Rs 12,40,322.63 crore and that of Bajaj Finance plunged Rs 12,127.47 crore to Rs 4,47,298.52 crore.
The market valuation of Reliance Industries tumbled Rs 5,818.43 crore to Rs 17,10,076.74 crore and that of TCS went lower by Rs 5,214.15 crore to Rs 12,27,739.80 crore.
Hindustan Unilever’s valuation eroded by Rs 4,417.23 crore to Rs 6,07,369.34 crore and that of ICICI Bank dipped by Rs 917.76 crore to Rs 6,96,495.74 crore.
However, the mcap of Bharti Airtel jumped Rs 5,643.3 crore to Rs 5,00,369.30 crore and that of Infosys climbed Rs 4,129.44 crore to Rs 5,56,271.03 crore.
Ajay Modi, vice president-research, Piper Serica, thinks this is a good time to go big on smallcap stocks, as valuations of quality companies are below their five and 10-year averages.
With over 10 years of public and private market research experience across sectors, Modi sees value in pockets textile exporters, wood-panel companies, small banks, NBFCs and hospitality.
In an interview to Moneycontrol, Modi says earnings will continue to be driven by BFSI and also expects improved from pharma and IT names in the second half of this fiscal. Edited excerpts:
What is your take on quarterly corporate earnings? Any surprises?
Earnings for Q4FY23 have largely been in line with expectations. EPS estimates were broadly as per expectations. The technology exporters led by Infosys had sharp underperformance. This was made up by banks that saw credit growth with improving asset quality and auto companies that saw improved margins led by cooling commodity prices.
Do you expect earnings upgrade cycle to resume from the second half of FY24?
We do not expect any sharp upgrades or downgrades. Earnings will continue to be driven by BFSI while there should be an improvement in the performance of pharma and IT exporters in the second half of FY24. There is scope for upgrades in some IT companies.
Will the pharma sector be the dark horse this financial year?
Pharma exporters saw sharp growth in FY21 and FY22, which was largely attributed to covid-led order books. However, over the last couple of quarters, large pharma companies saw muted growth and margin compression led by a price reduction in the US.
While it is too early to say if we will see a marked improvement in the pharma pocket in FY24, the valuations of companies like Divis give comfort to long-term investors.
Do you see earnings upgrade cycle continuing in the banking space?
We believe that the next couple of years will see some consolidation in the banking space. Smaller banks have reported steady performance and improving asset quality. There will be upgrades in this pocket. Large banks continue to grow well. However, the valuation multiples leave very little room for large earnings upgrades.
Your take on FMCG space?
FMCG companies saw steady margin improvement, which was an outcome of falling input costs. However, the volume growth remains muted. Rural demand continues to remain sluggish. It is expected that monsoon this year will be good and if that happens, rural demand should stabilise.
As the country goes into the (Lok Sabha) election, there will be some splurge on rural India leading to further improvement in demand. However, a large part of this may only be visible three quarters from now.
