Shares of most companies from the Adani group fell on Friday after US-based index-provider MSCI cut free-float designations of four scrips from the Adani group, which could impact their index weightings. While the group flagship Adani Enterprises Ltd fell 4.15% to Rs1,876.60 on the BSE, scrips of four other group companies closed the week in lower circuits. Meanwhile, Moody's cut the outlook to negative from stable for four companies while maintaining the stable outlook on four other companies from the Adani group.

 

The four companies whose free-float designations are cut by MSCI are: Adani group flagship Adani Enterprises Ltd, Adani Total Gas Ltd, Adani Transmission Ltd and ACC Ltd. As of 30th January, these four companies had a combined 0.4% weightage in the MSCI emerging markets index. MSCI defines free float as a proportion of shares outstanding that are available to investors to purchase in markets. 

 

While MSCI has not provided an exact reduction, a note by Nuvama Wealth Management Ltd (erstwhile Edelweiss Securities Ltd) says that the weightage of Adani Enterprises will decrease by 30bps (basis points) to 0.5% in the MSCI global standard index. The weightage of the other three scrips from Adani group will also come down, resulting in around US$500mn (million) combined outflows from these stocks, Nuvama says.

 

In a statement on Wednesday, the index-provider had stated, "MSCI has determined that the characteristics of certain investors have sufficient uncertainty that they should no longer be designated as free float pursuant to our methodology. This determination has triggered a free float review of the Adani group securities."

 

MSCI says it has received feedback from a range of market participants concerning the eligibility and free float determination of specific securities associated with the Adani group for the MSCI Global Investable Market Indexes (GIMI).

 

MSCI defines the free float of security as the proportion of shares outstanding that is considered available for purchase in the public equity markets by international investors.

 

Except Adani Ports And Special Economic Zone Ltd and Ambuja Cements Ltd, scrips of all other Adani group companies ended the week in the red. Even the gain by these two companies was less than 1% from Thursday's close.

Shares of four out of 10 Adani group companies hit a 5% lower circuit on BSE. It includes Adani Power Ltd (Rs164.30), Adani Transmission Ltd (Rs1,186.15), Adani Green Energy Ltd (Rs723.90) and Adani Total Gas Ltd was trading at Rs1,258.25.
 
Shares of ACC Ltd and New Delhi Television Ltd (NDTV) ended Friday lower at Rs1,903 (down 1.85%) and Rs208.65 (down 3.65%) on the BSE.

Adani Wilmar Ltd, which was trading in the green in morning trading, ended the day in red at Rs436.10 with a loss of 0.95%.   
 
Shares of two Adani group companies closed marginally up. Adani Ports And Special Economic Zone Ltd ended the week 0.31% up at Rs583.85, while and Ambuja Cements Ltd closed 0.85% up at Rs361.05.
 
The 30-share benchmark Sensex closed the week flat at 60,682.70 points.

Separately, in a statement, Moody's says it cut the outlook to negative on Adani Green Energy, Adani Transmission Step-One Ltd, Adani Electricity Mumbai Ltd and Adani Green Energy Restricted Group (AGEL RG-1) comprising Adani Green Energy (UP) Ltd,  Parampujya Solar Energy Pvt Ltd and Prayatna Developers Pvt Ltd.

Companies whose outlook remained stable are Adani Ports and Special Economic Zone and Adani International Container Terminal Pvt Ltd, Adani Green Energy Restricted Group (AGEL RG-2) comprising Wardha Solar (Maharashtra) Pvt Ltd, Kodangal Solar Parks Pvt Ltd and Adani Renewable Energy (Rj) Ltd and Adani Transmission Restricted Group 1 (ATL RG1) comprising Barmer Power Transmission Service Ltd, Raipur-Rajnandgaon-Warora Transmission Ltd, Sipat Transmission Ltd, Thar Power Transmission Service Ltd, Hadoti Power Transmission Service Ltd and Chhattisgarh-WR Transmission Ltd.

Moody's says the change in the outlook to negative on Adani Green Energy considers the company's large capital spending programme and dependence on sponsor support, potentially in the form of subordinated debt or shareholder loans, which will likely be less certain in the current environment. "The negative outlook also factors in the company's significant refinancing needs of around US$2.7 billion in the fiscal year ending March 2025 and limited headroom in its credit metrics to manage any material increase in funding costs."