In the event that the Adani group is unable to successfully defend itself against the claims made by Hindenburg Research in its study, they claimed that SBI can recoup from its loan exposure to the Adani group in 9 to 10 months because of their RoE of more than 10%. In a similar vein, they alleged that LIC has $26,000 crore in cash on hand and $21,000 crore in unclaimed funds. As a result, if LIC’s investment in Adani Group equities decreases to zero, it will be able to pay back public funds using the cash on hand as well as the unclaimed money.
Santosh Meena, Head of Research at Swastika Investmart, responded to the question of whether public money in SBI and LIC is secure following the Adani-Hindenburg scandal by saying, Despite their exposure to the Adani Group, SBI and LIC investors need not be concerned. The SBI, for example, has a tiny amount of exposure to the Adani Group of Companiesu2014roughly 0.88% of its entire loan booku2014but management is convinced that this exposure is supported by robust cash flows. The prognosis for the banking industry as a whole is promising, and SBI is the best option for India’s capex theme.
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Avinash Gorakshkar, Head of Research at Profitmart Securities, commented on the recent Adani-Hindenburg dispute and its effects on LIC and SBI. He said, LIC has declared that its investment in Adani group stocks is around 30,000 crore while the absolute value of its investment in Adani group stocks is around 40,000 crore. As a result, LIC has a sizable one-third return on its long-term investment in Adani Group equities. If the stock price of the Adani Group continues to plunge, LIC will have almost $26,000 crore in cash on hand to pay back its clients’ claim amounts. The insurance giant also holds an unclaimed amount of over 21,000 crore. So, in total, it has more than 45,000 crore cash in had to address the crisis if its investment in Adani group stocks becomes nil.
The largest commercial bank in India, SBI, has already stated that its debt exposure to LIC is less than 1% of its total loan book, Avinash Gorakshkar continued. SBI’s RoE is currently greater than 10%. Therefore, if the Adani Group defaults on its debt to the SBI, the state-owned bank will be able to exit this NPA within 9 to 10 months.
Adani Green and Adani Ports bonds, which mature in 2024, as well as Adani group equities, have seen a significant decline in price following the publishing of a Hindenburg Research study prior to Adani Enterprises FPO. Concerns have been expressed about the public funds being invested by SBI and LIC in Adani group enterprises as a result of this.
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