Adani Enterprises hits new high on inclusion in Nifty50

Shares of Adani Enterprises hit a fresh all-time high in opening trade on Friday after the National Stock Exchange (NSE) announced that the Adani Group’s flagship company will be included in the Nifty50 index. The exchange on Thursday announced that Adani Enterprises would be included in the Nifty 50 index, replacing Shree Cement, from September 30. The NSE reviews the inclusion and exclusion of stocks semi-annually based on various factors including free float market capitalisation.

Adani Enterprises’ inclusion in the Nifty 50 index is a boost for India's richest person Gautam Adani, who recently became the first Asian person to break into the top three of the world's wealthiest on the back of the strong rally in the share price of Adani Group companies. This would be the second Adani Group share to be included in the Nifty index, after Adani Ports and Special Economic Zone.

Buoyed by the development, Adani Enterprises share price opened 0.9% higher at ₹3,263, against the previous closing price of ₹3,232.75 on the Bombay Stock Exchange (BSE). Extending opening gains, the stock rose as much as 1.75% to touch a new record high of ₹3,289.55. In comparision, the BSE Sensex was trading 145 points higher at 58,911 levels, tracking mixed cues from global peers and gains in power and capital goods stocks. Meanwhile, Shree Cement shares dropped 1.6% during the session so far on the report of exclusion from the Nifty 50 index.

Adani Enterprises shares have delivered a 144% return in the last ten months, rising from its 52-week low of 1,344.60 touched on October 28, 2021. The multibagger stock has surged 107% in the past one year, and 90% since the beginning of the calendar year 2022 (year-to-date). The largecap stock has surged 98% over a six-month period and 21% in one month. The stock has been gaining for the last 5 sessions and has added 5.74% during this period.

With a market capitalisation of ₹3,70,278 crore, Adani Enterprises is now the 17th largest listed company on the BSE. Apart from Adani Enterprises, Adani Group owns 7 listed companies - Adani Green Energy, Adani Ports, Adani Power, Adani Total Gas, Adani Transmission, and Adani Wilmar.

Adani Transmission is the biggest in terms of m-cap (₹4,32,437.47 crore), the tenth most values listed firm in India, followed by Adani Total Gas (₹3,99,868.95 crore) and Adani Green Energy (₹3,79,035.21 crore).

Recently a report by Fitch Ratings’ subsidiary CreditSights raised concerns about the Adani Group stocks, saying that the conglomerate’s growing expansion appetite is largely debt-funded. The rating agency says it is becoming increasingly concerned about the group’s rapid pace of growth and its high leverage levels. “Excessive debt and overleveraging by the group could have a cascading negative effect on the credit quality of the bond issuing entities within the group and heightens contagion risk in case any entity falls into distress,” it says.

CreditSights says it sees little evidence of promoter equity capital injections into the group companies, which is needed to reduce leverage in their stressed balance sheets. Over the past few years, the Adani group has aggressively expanded across virtually all its businesses. This includes both rapidly growing operations of its existing businesses (for example, Adani Green is aiming at growing its operational renewable capacity almost five-fold by FY25), and entering into new sectors, in which it has no prior experience in (including copper refining, petrochemicals, data centers and most recently, telecom and alumina/aluminium production among others).