New Delhi: Adani Group equities may receive a boost in their recovery from the significant market value loss of over $100 billion, thanks to a seasonal tailwind. An analysis by Bloomberg News reveals that stocks of four companies controlled by billionaire Gautam Adani, including the conglomerate’s flagship Adani Enterprises Ltd., exhibit a strong tendency to climb during the second half of the year.
It is important to note that the group has faced unprecedented turmoil following allegations of accounting fraud and stock manipulation made earlier this year by US short-seller Hindenburg Research.
Let’s examine four charts that highlight these effects from the present until the end of the year. Adani Enterprises Ltd. and Adani Transmission Ltd., two of the companies analyzed, are looking to raise up to $2.6 billion, indicating the group’s continued focus on growth.
The flagship stock of the Adani group, Adani Enterprises, has historically delivered an average return of 21.4% during the period between May 15 and Dec. 31. The chart demonstrates that the stock has largely moved sideways from June to September before experiencing a strong rally towards the end of the year.
Adani Enterprises concluded a seven-year winning streak in 2022, having recorded gains in each evaluation period since 2016.
Adani Green, listed in 2018, has shown average gains of around 92% during these periods, exhibiting a consistent uptrend with a win rate of 80%. Notably, there has been a 115-percentage-point difference between the annualized returns for the evaluation period and the rest of the year, indicating a seasonal bias towards the upside during this specific timeframe.
Seasonality has strongly favoured Adani Transmission between the present and the end of the calendar year. The stock has achieved a mean return of 62%, with a perfect win rate of 100%, as it has never fallen during the evaluation period since its listing. The annualized return spread in comparison to the rest of the year is 85%, suggesting the presence of clear seasonality.
Adani Ports, on the other hand, stands as an outlier within this time range. The stock tends to peak in early June, followed by a period of sideways movement with notable volatility before a rally takes hold from late November until the end of the year. Consequently, the stock has delivered an average performance of approximately 10%, despite a win rate of 69%. The annualized return spread is only 3.2%, indicating the absence of any significant seasonal upside biases for this stock.
In conclusion, the seasonal tailwind observed in the performance of Adani Group equities presents a ray of hope for their recovery from the recent market value decline. However, it is essential to consider the unprecedented challenges faced by the group and conduct a comprehensive analysis of other factors such as company fundamentals, growth prospects, and market sentiment, before making investment decisions.
