LIC loses Rs 18,000 crore as rout in Adani stocks continues

New Delhi/ Mumbai: Life Insurance Corporation of India (LIC) has paid a heavy price for major exposure in Adani group's stocks. In the past two trading days, LIC's combined investment in Adani group stocks has been reduced to Rs 62,621 crore (on January 27, 2023) from Rs 81,268 crore (on January 24, 2023). Apart from LIC, no other major mutual fund has any significant exposure to Adani group shares. LIC's total notional loss stands at Rs 18,647 crore.

India's biggest institutional investor, LIC held over 1 percent stake in Adani Enterprises, Adani Green Energy, Adani Ports, Adani Total Gas, and Adani Transmission, and recently acquired cement major Ambuja Cements and ACC as of December 31, 2022. Shares of these companies tanked somewhere between 19 percent and 27 percent in the past two trading sessions.

Hindenburg Research report impact

Hindenburg report that came out on Monday claimed that Adani Enterprises is involved in major stock manipulation and accounting fraud schemes over the course of the last few decades. Although Adani management clarified in media that day itself saying the Hindenburg Research report is stale, baseless and slams discredited allegations that have been tested and rejected by India's highest courts. But by that time damage was done. Shares of Adani group came under pressure after the report came out in public and some of the shares. The rout started on Tuesday and further deepened Thursday, with some units like Adani Green Energy Ltd. and Adani Total Gas Ltd. tumbling by their daily limit of 20%. Adani Enterprises fell 19%.

Adani Group loses Rs 46K cr in m-cap after Hindenburg report alleges fraud, stock manipulation

Jugeshinder Singh, Group CFO, of Adani group further said that the timing of the report's publication clearly betrays a brazen, mala fide intention to undermine the Adani Group's reputation with the principal objective of damaging the upcoming follow-on public offering from Adani Enterprises, the biggest FPO ever in India. Adani Enterprises' Rs 20,000 crore FPO opened for subscription on January 27.

LIC: Public money at stake

With over 250 million policyholders across India and assets under management as large as the nation's mutual fund industry, LIC is among India's systemically most important institutions. Importanly, apart from LIC no other major mutual fund has any significant exposure in Adani group shares. Its exposure to the Adani Group, known to be closely aligned to Prime Minister Narendra Modi's development goals, is also symbolic of the tycoon's political clout.

In absolute terms, the total investment of LIC in Adani Total Gas declined by Rs 6,237 crore since January 24. It was followed by Adani Enterprises (down 3,279 crore), Adani Ports (down Rs 3,205 crore), Adani Transmission (down Rs 3,036 crore), Ambuja Cements (down Rs 1,474 crore), Adani Green Energy (down Rs 871 crore) and ACC (down Rs 544 crore).

Overall, the market capitalisation of 10-listed Adani Group companies tanked around Rs 4 lakh crore to nearly Rs 15 lakh crore on January 27 from Rs 19 lakh crore on January 24, 2023. Meanwhile, the benchmark equity index BSE Sensex also cracked 1,647 points, or 2.70 percent, to 59,330.90.