LIC's investment in Adani stocks soars, surpassing Rs 45,000 crore in just under 2 months

After staring at potential losses on its investment in Adani Group stocks in February, Life Insurance Corporation of India (LIC) will now be on cloud nine, as the market value of its holding has seen significant appreciation in less than 2 months.

The country’s largest insurer and a leading institutional investor in Adani Group saw the market value of its holdings increase by over Rs 6,200 crore since April to Rs 45,481 crore, thanks to the stellar rally in the stocks.

The market value was calculated based on the holding as of March end and Tuesday’s close price of stocks.

The rout in Adani stocks after Hindenburg Research’s allegations late January of corporate misgovernance, stock price manipulation and several others in the group, eroded over $100 billion in market capitalization in a month.

This had an impact on LIC’s investment in the stocks to the extent that investors feared the insurer booking losses.

Despite the rout in Adani stocks triggered by the explosive report of Hindenburg, the life insurer had increased its stake in four companies – Adani Enterprises, Adani Green Energy, Adani Transmission, and Adani Total Gas, during the March quarter.

From its 52-week low hit after the Hindenburg report, shares of Adani Enterprises have risen a whopping 159%. In May alone, shares have risen 37%.

Shares of Adani Group’s cash cow Adani Ports and SEZ became the first in the group to claw back towards levels seen prior to the Hindenburg report.

Much of the gains in Adani stocks have come in the past three sessions as Dalal Street investors breathed a sigh of relief after the Supreme Court-appointed panel to investigate the allegations made by Hindenburg Research, said there were no regulatory lapses around the price manipulations in Adani stocks.

The second booster shot for Adani stocks came from their recent investor GQG Partners. The investment firm owned by NRI investor Rajiv Jain, has raised its stake in Adani Group by about 10%.

This comes over a month after the firm made a brave contra bet by investing over Rs 15,000 crore in Adani stocks at the peak of the Hindenburg-led rout.

In the backdrop of the news developments, it does look like the Hindenburg effect is fading and Adani bulls are on track to get their mojo back.