Thread by @maheshperi

The Adani Group shares have been in the news for all the wrong reasons with regulators turning deaf and blind. Mahua Moitra has been crying hoarse for an investigation with the FM acting ignorant. Here is a lowdown of what is wrong with Adani shares.

1. The year also saw Gautam Adani becoming the second richest man in India as the market cap of his stocks went up from 2 lac crore to 9.5 lac crore. Surprisingly, the group firms have relatively low investment analyst coverage, a rarity for such Marketcap company.

2. During the year, Adani stocks gained between 250% to 1000%, the average gain being 450%. There has been no international brokerage recommendation. No Indian mutual fund other than LIC Invested in these stocks. But the stocks kept rising, much against the fundamentals.

3. SEBI mandates a minimum free float of 25% shares to avoid price manipulation. A limited supply is prone for price rigging by operators and promoters. In Ruchi Soya, owned by Baba Ramdev, only 1% stock is free float and the stock went up by 70 Times in a year.

4. MoneyControl (owned by Mukesh Ambani) reported that Adanis own 74.5% equity, just short of the mandatory 75%. Seven Foreign Portfolio Investors (FPIs) hold close to 20% of the 25% free float while LIC holds a lot of the rest. The free float is less than 3%.

5. The seven FPIs invested most of their funds in Adani Stocks: Elara invested 97.95% of its fund; Cresta invested 97.7%; Abula invested 95.4%; Vespara invested 99.4%; AIC has 99.2%; LTS has 97.3% and
APMS has 96.9% of its funds. It is as if they were funded for Adani stocks.

6. These FPIs have doubtful credentials. Based in Mauritius, operate from similar addresses, have opaque ownership, and invest in sync with each other. They were earlier probed for round tripping. Indian authorities struggled to identify who ultimately controls the money.

7. In response to a question in Indian parliament, the government disclosed names of people registered as responsible for each of the funds. Bloomberg tried to find them but couldn't find the contact details.

8.These FPIs earlier invested in Winsome Diamonds whose promoter is now a declared willful defaulter and economic fugitive. He defaulted on a loan of $900 million. Mehta's whereabouts are unknown and India is investigating him for alleged money laundering and round-tripping.

9. The FPI's also invested in Sterling Biotech, whose promoters fled India after defaulting loans. Having declared insolvency, Sandesra's are now trying to buy back the same company at 5% the value. They are absconders, insolvent but have money stashed abroad to buy companies.

10. Cresta and Albula each held an identical 6.86% in Ruchi Soya. Later they were joined by Elara. Ruchi Soya entered bankruptcy two years later, was declared a defaulter and now bought out by Baba Ramdev after a 56% loan waiver and an acquisition funded by Indian banks.

So, here we have - Adani Group stocks; little analyst coverage, run up 4 to 10 times ; held by FPIs with no details of the beneficial owners. These FPIs earlier invested in stocks of promoters who declared absconded from India.
Adanis total debt is about 1.30 lac crores!

End.