“It is clearly not our decision. It was their decision. So, we didn’t pick and choose. But from a structural point of view, we thought it is better to buy directly from the promoter family,” said Jain, adding that the secondary is faster and more efficient. Is.
He said the way the stock was trending, he knew it wouldn’t last forever. In the interview, Jain said, the faster the stock falls, the sooner the fall will end. Jain said the share price may not be as attractive in six months.
Rajeev Jain said that not only Adani, there have been other instances when they have been aggressive during the fall. He cited the example of buying after the 2004 elections, when the overall market fell by 25 per cent. In 1996, ITC faced a crisis due to the tax situation which they had bought and owned for 20 years.
“So, crisis usually creates opportunity. But to be clear, I have got some of the crises completely wrong,” Jain said
Jain also cited the example of the Infosys whistleblower crisis from 2019, after which the stock fell by 30-45 per cent. But people forget, he said. He also said that he has bought Petrobras very aggressively over the past two years.
He added that utility-type businesses are “unique beasts” and “have a very long tail”. If they grow, they will have negative free cash flow because they get paid on their capex. He added that many people do not understand “how this game is played on the utility side”.
Debt to EBITDA averages around three times for most Adani companies. Meanwhile, US utilities have debt to EBITDA of around 6-6.5 times. “Because of the stability and long tail, these utility businesses can afford higher debt. If you are a cyclical business, you should not be leveraged. In fact, in a regulated business you are required to have leverage. There’s nothing like a debt-free, regulated utility,” he said.
He said that a little lethargy is okay. Jain said India needs someone who can meet its infrastructure needs. He said Adani is running the Mumbai airport and its power transmission and distribution company is fine.
Jain also said that he has worked hard with people who have worked with the Adani group to understand the culture of the place. “And, we feel very comfortable with how the group has done,” he said.
Rajiv Jain said that people were worried about investment, but he has talked a lot with his investors. He added that GQG continues to talk to its investors.
“Why is it that the Adani family owns 65-75% of these businesses and has created this empire. This is due to their strong cash flow generating capabilities. They’re not really issuing equity and being stingy about it. We like that,” he said.
Jain said that he did not already know Gautam Adani or his brother Vinod Adani. He added that some facts should not be lost in the midst of the controversy – that Adani was given nothing on a platter. Jain, however, said that he does not deny the allegations of political links.
He said that he has heard similar stories about Reliance since 25 years. He said such stories come and go but they do not base their affiliation on politics. Jain said that at the end of the day the market is about dollars and cents.