Billionaire Adani May Win Three More Slots on MSCI India Index

(Bloomberg) -- Billionaire Gautam Adani is likely to see three more companies from his coal mining-to-data centers conglomerate join the MSCI India Index after shares in each one of them more than doubled this year, according to analysts.

The group's flagship Adani Enterprises Ltd., gas supplier Adani Total Gas Ltd. and power distributor Adani Transmission Ltd. may get included in MSCI Inc.'s country benchmark after the index provider's semi-annual review of its gauges in May, according to broker Edelweiss Financial Services Ltd. and independent research provider Smartkarma. Adani Green Energy Ltd. and Adani Ports & Special Economic Zone Ltd. are already there.

The potential inclusions are seen further boosting wealth for Adani, who has added $20.2 billion to his net worth this year, the second-biggest increase among the world's billionaires. The tycoon -- who started out as a commodities trader in the late 1980s -- has diversified from mines, ports and power plants into airports, data centers and defense. The rally in stocks shows investors have rewarded his strategy of interlocking his group's interests with the Indian government's infrastructure program.

There is “very high probability of these Adani names to come in the index primarily due to the surge in their market capitalization,” Brian Freitas, a New Zealand-based analyst at Smartkarma, said by phone. “ETFs and other passive funds will have to buy, adding to Adani's fortune.”

Passive funds may have to buy shares worth about $830 million in total in the three companies after their inclusion, according to calculations by Freitas. Still, these stocks “trade much much higher than their global peers and longer-term returns may not be worth the risks involved,” he wrote in a note Wednesday.

Meanwhile, S&P Dow Jones Indices said in a statement Monday that it will remove Adani Ports and Special Economic Zone from the Dow Jones Sustainability Indexes because of links to Myanmar military.

A lack of analyst coverage for many of the Adani group's companies hasn't deterred MSCI from adding their stocks as the index provider's focus is more on other factors such as market value. Adani Green, which was added to the MSCI India gauge end-November, still has no analysts covering it, according to data compiled by Bloomberg.

Freitas also sees the possibility of Adani Green being included in the NSE Nifty 50 Index, the National Stock Exchange of India Ltd.'s benchmark gauge, once the bourse allows derivative contracts on the stock.

Adani group shares traded mixed amid a broad decline in Indian equities on Thursday. Adani Transmission jumped 5%, Adani Total Gas climbed 2.3% while Adani Ports rose 0.2% as of 10:28 a.m. in Mumbai. Adani Enterprises and Adani Green fell about 1.2% each.

MSCI is set to declare the results of its latest review on May 11 and changes will be effective from close of trading on May 28, according to an announcement by the index provider in February.

“We do not comment on market speculation on index changes,” a spokeswoman for MSCI wrote in an emailed response.

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