Adani Enterprises To Adani Power Shares Fall By 2-7% On September 12: Which Adani Stock To Buy When They Dip?

The port-to-power Adani Group-led stocks could not retain the bulls of the previous session, as all 10-listed stocks came tumbling down the hill on Tuesday. Adani stocks are in red, nosediving in the range of 2% to near 7%. The reason why bears have toppled Adani shares is because a new claim has taken the limelight, and surprisingly market regulator Sebi is being blamed for a conflict of interest in probing the Adani-Hindenburg case. Amidst the fall in these stocks, brokerage Geojit has recommended accumulating in Adani's cement stock due to its strong operational performance and improved margins.

On September 12, Adani Power and Adani Energy Solutions were dragged the most by bears, as they dipped by 6.4% and 5.7% in the day. Adani Enterprises shed over 3.2%, while Adani Ports and Adani Wilmar dipped around 3.3% each. Adani Total Gas and Adani Green Energy tumbled nearly 3% each.

Adani's cement stocks Ambuja Cements and ACC plunged by 3.2% and 1.6%. Further, the media stock NDTV plummeted by 4.6%.

Why Adani Shares Are Falling On September 12?

According to the Bar and Bench report, in a fresh affidavit by one of the petitioners Anamika Jaiswal, it was stated that the markets regulator ignored a Directorate of Revenue Intelligence (DRI) alert in early 2014 about over-invoicing and stock market manipulation by Adani amounting to siphoning of ₹2,323 crore rupees.

The petitioner's report said, "It is shocking that the SEBI has suppressed and concealed this important information from this Hon'ble Court and never conducted any investigation based on the DRI alert ... Rather, they have categorically stated before the Expert Committee that the investigation into possible contraventions of rules and regulations by the Adani group of companies started on October 23, 2020."

George Soros-backed OCCRP report dated August 30, had highlighted the involvement of two investors Nasser Ali Shaban Ahli from the United Arab Emirates and Chang Chung-Ling from Taiwan, with heavy dealings in Adani Group-backed stocks. It also revealed that both Chang and Ahli have come under the radar of authorities in India.

OCCRP mentioned that the first case involved a 2007 investigation into an allegedly illegal diamond trading scheme by the Directorate of Revenue Intelligence (DRI), India's premier investigative agency under the Ministry of Finance. Further, it cited a DRI report that described Chang as the director of three Adani companies involved in the scheme, while Ahli represented a trading firm that was also involved. During the 2007 investigation, it was alleged that Chang shared a Singapore residential address with Vinod Adani, the low-profile older brother of the Adani Group's chairman.

The second time the two names appeared was when an alleged over-invoicing scam was revealed in a separate 2014 DRI investigation. OCCRP said the agency claimed that Adani Group companies were illegally funneling money out of India by overpaying their own foreign subsidiary by as much as $1 billion for imported power generation equipment.

When Hindenburg accused Adani of brazen stock manipulation in its report dated January 24, the US short seller also stated that Chang was either a director or shareholder in a Singapore company that was listed as a "related party" in a disclosure by an Adani company.

However, it needs to be noted that Adani Group has denied allegations related to stock manipulation from Hindenburg and OCCRP.

Which Adani Stock To Buy When They Fall?

Coming back to Adani shares, ACC stock is the least impacted among the other siblings. Amidst the drop in Adani shares, ACC looks attractive.

In its research report dated September 11, Geojit mentioned that in Q1FY24, ACC's revenue grew 16.4% YoY to Rs 5,201 crore, driven by the rise in sales volume. EBITDA surged by 80.9% YoY to Rs 771 crore, with EBITDA margin expanding by 530bps to 14.8%, driven by cost reductions. Additionally, PAT surged by 105% YoY to Rs 466 crore.

Further, the brokerage highlighted that "ACC had a strong quarter, achieving substantial revenue growth and improved margins due to operational excellence and increased sales volume. Ongoing efforts to enhance operational efficiency, achieve continuous capacity expansion, and leverage group synergies will remain key growth drivers for the company in the near future. Furthermore, the cement industry is in a positive demand cycle, and favourable cost factors are expected to sustain the company's growth trajectory in the upcoming quarters. Hence, we upgrade to ACCUMULATE with a target price of Rs 2,325 based on 11.5x FY25E adj. EPS."

On BSE, ACC shares are trading at Rs 2010.90 apiece, down by 1.96% on Tuesday. Its market cap is nearly Rs 16,238 crore. From the current market price and Geojit's target price, the stock has a potential of nearly 16% upside.

Adani holds a 63.15% stake in Ambuja Cements which further owns 50.05% in its subsidiary, ACC. The Gautam Adani-backed Group directly owns a 6.64% stake in ACC.

Disclaimer

The recommendations made above are by market analysts and are not advised by either the author nor Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.