Adani Green sees a 565% stock rally: A $23 bn firm with no analyst coverage

With a free float of about 21%, Adani Green is one of the most illiquid stocks in the Nifty 100 gauge, data showed

Adani Green Energy Ltd., a unit of one of India’s largest conglomerates, is the best performer this year among the nation’s top 100 stocks. It is also the only one in that cohort without a single analyst rating.

Shares of Adani Green have jumped 565% in 2020 versus a gain of just 10% for the National Stock Exchange’s Nifty 100 Index. The rally helped the company recently win entry to the MSCI India Index.

While the stock’s surge may not come as a huge surprise given the heightened global popularity of sustainable assets such as renewable energy stocks amid the pandemic, the complete lack of analyst coverage on the company has left some market participants baffled.

“I find it strange that analysts aren’t covering it right now,” said Sameer Kalra, a strategist at Target Investing in Mumbai, while adding that the company’s low free float -- the percentage of shares available for trading -- may be the key reason for that.

With a free float of about 21%, Adani Green is one of the most illiquid stocks in the Nifty 100 gauge, data compiled by Bloomberg show.

The low float means the stock is driven more by flows than fundamentals, Kalra said.

‘Takes Courage’

Meanwhile, this year’s gains have pushed the company’s market cap to 1.73 trillion rupees ($23.4 billion) -- a more than 40-fold jump from its value at the end of June 2018. That was the month in which the company made its stock-market debut as Adani Enterprises Ltd.’s demerged renewable power business.

At the start of 2020, Adani set a goal of becoming the world’s largest renewable power company by 2025. In June, it said it will invest 450 billion rupees to execute what it called the world’s largest solar order.

“It takes courage to take a call when things are in the process, when the WIP is happening,” said Umesh Mehta, head of research at Samco Securities Ltd. “That is the time it’s difficult and analysts fear they may go wrong. That is why they are silent or don’t want to put their hands into it because they have to justify their call.”