Adani Enterprises to enter Nifty 50 index in a new boost for Gautam Adani

Adani Enterprises will replace Shree Cement in the most tracked stocks gauge in India on September 30

Adani Enterprises Ltd., the flagship company of Asia’s richest man, Gautam Adani, has become the second unit of the ports-to-power conglomerate to be included in one of India’s key equity gauges as the group expands.

The firm will join the NSE Nifty 50 index, the most tracked stocks gauge in the country, replacing Shree Cement Ltd., according to a statement on Thursday from National Stock Exchange of India Ltd.’s index-management firm. The changes, which are based on factors including free float market capitalisation, were expected and will be effective from September 30. Shree Cement is the leading cement-making firm, owning brands such as Roofon, Bangur Power, Shree Jung Rodhak, Bangur Cement and Rockstrong.

It’s a boost for the billionaire, whose firms’ weightages have been adjusted on the MSCI India Index in recent months. The group is surging ahead with a string of acquisitions even as some analysts flag concerns about its level of leverage. 

The Index Maintenance Sub-Committee - Equity (IMSC) of NSE Indices Limited has decided to make the changes as a part of its periodic review, a release said on Thursday.

The inclusion of Adani Enterprises on the Nifty 50 could result in a net inflow of around $213 million for the stocks counter, while Shree Cement will see an outflow of $87 million, according to Edelweiss Securities Ltd. analyst Abhilash Pagaria, reported Bloomberg.

Shares of Adani Enterprises have risen 89% this year, while all seven listed companies have rallied, led by a 310% surge in Adani Power Ltd. The group has grown rapidly, announcing plans to push into multiple new businesses, including media, healthcare and digital services. 

Adani’s aggressive expansion has raised concerns, with some analysts pointing to pressure on the conglomerate’s credit metrics and cash flow.

Group firms Adani Green Energy Ltd. and Adani Transmission Ltd. have significantly higher average free float market capitalisation than the flagship firm, but will not be included in the Nifty Index. Trading into their stock derivatives is not yet allowed by India’s exchanges, Pagaria wrote in a note earlier this month.

Adani Enterprises' inclusion comes at a time when the group company is "deeply overleveraged" and its many investments in capital-intensive businesses could pose long-term risks to investors, Fitch Group's debt research unit CreditSights said last month.

The group has also been on an acquisition spree in recent months across sectors including renewable energy, power, cement and media, with the latest being its bid to buy a controlling stake in Indian news network NDTV.

Apart from Nifty 50, changes have been announced in several indices, including Nifty Next 50, Nifty 500, Nifty 200 and Nifty 100.

Adani Total Gas Ltd, Bharat Electronics Ltd, Hindustan Aeronautics Ltd, Indian Railway Catering and Tourism Corporation Ltd, MphasiS Ltd, Samvardhana Motherson International and Shree Cement Ltd will find a place in the Nifty Next 50.

Adani Enterprises, Jubilant Foodworks, Lupin, MindTree Ltd, Punjab National Bank, Steel Authority of India Ltd and Zydus Lifesciences will be dropped from the Nifty Next 50 index.

According to the release, no changes are being made in Nifty Aditya Birla Group, Nifty Mahindra Group and Nifty Tata Group indices.

Separately, NSE Indicies has decided to exclude B&B Triplewall Containers and SecUR Credentials from Nifty SME Emerge index on account of proposed migration of these companies from NSE's SME Emerge platform to the exchange's main board. This change will become effective from September 8.