ADAG stocks surge, but analysts advise caution

NEW DELHI:  Anil Dhirubhai Ambani Group (ADAG) company stocks have surged between 170-360 per cent over the last one year against just a 50-53 per cent rise in the Nifty50 and Sensex indices during the same period. Over the last one month, when the benchmark indices grew by around 3.25 per cent, all these ADAG group stocks have grown by over 100 per cent in value. 

Reliance Power, for instance, has surged 120 per cent in the last one month and a staggering 360 per cent in the last year.  Similarly, Reliance Infrastructure has surged 63 per cent over the last month and 190 per cent in the last year. Shares of Reliance Communications, which was once India’s leading telecom operator, is up by 200 per cent in the last month and 275 per cent in the last year.  

Reliance Home Finance and Reliance Naval and Engineering stocks have each risen by around 135 per cent in the last one month and over 200 per cent in one year. This unprecedented surge has pushed the market capitalization of the group by over 1,000 per cent in less than three months—jumped from Rs 733 crore in March 2021 to Rs 7,866 crore on June 18, 2021. 

The key reason that seems to be pushing these stocks up is the Group’s debt reduction plans, fund raising efforts, and very high liquidity in the stock market.  Despite this impressive surge, experts maintain that investors should be extra careful while dealing with these stocks. “While these Penny stocks have gone up manifold in the last one year, they have no fundamentals whatsoever. Retail investors should not get tricked that these companies would be back to normal operations in foreseeable future,” said an analyst.