In a striking display of divergent investment philosophies, GQG Partners offloaded nearly 58.9 lakh shares of Adani Enterprises for approximately Rs 1,435 crore in a significant block deal on May 14, 2026. The entire stake found a buyer in SBI Mutual Fund, which acquired the shares at Rs 2,435.6 apiece. This transaction occurred during a sharp 9% intraday rally in the stock, which closed at Rs 2,712.9—marking its highest level since November 19, 2024.
The deal tells a story of two institutional camps reading the same tea leaves differently.
GQG's exit wasn't a rejection of the Adani Group story—the firm had actually increased its holdings in Adani Energy Solutions and Adani Green Energy during the March quarter. Instead, it reflects a strategic portfolio rebalancing toward more predictable, cash-generating utility businesses over the diversified conglomerate model.
The FII retreat stems from multiple concerns. The ongoing US SEC civil fraud case against Gautam Adani continues to cast a shadow, even though a US court recently granted Adani's request to schedule a hearing on his dismissal plea. For foreign investors, particularly US-based institutions, this regulatory overhang creates compliance and reputational risks that many prefer to avoid. The scars from the Hindenburg Research episode in 2023 haven't fully healed either—trust takes time to rebuild.
Beyond regulatory worries, FIIs are recalibrating their risk-return expectations. Despite the stock's recent rally, valuations appeared stretched to some. The Q4 earnings didn't help matters either. Adani Enterprises reported a net loss of Rs 221 crore compared to a profit of Rs 3,845 crore in the year-ago period. While revenue climbed 20% year-on-year to Rs 32,439 crore, the bottom-line deterioration gave foreign investors pause. InvestorPresentations
Enter SBI Mutual Fund, playing the contrarian hand. The acquisition at Rs 2,435.6 per share represented a discount to the day's closing price, suggesting SBI MF saw value where others saw risk. Domestic mutual funds as a group increased their holdings in Adani Enterprises by 2.4% in April 2026, with an estimated net value addition of Rs 850 crore.
What do domestic investors see that foreign investors are missing? For starters, they have superior local market understanding. DIIs are more comfortable navigating Indian regulatory frameworks and assessing the practical implications of government policies driving infrastructure development. They also possess longer investment horizons—patient capital that can withstand short-term earnings volatility for long-term value creation.
Most importantly, domestic investors are looking past the quarterly net loss to the operational resilience underneath. EBITDA actually rose 3% year-on-year to Rs 4,479 crore, indicating that core business operations remained healthy despite bottom-line pressures. This divergence between EBITDA growth and PAT decline tells an important story about what's really happening at Adani Enterprises. InvestorPresentations
The Q4 profit collapse from Rs 3,845 crore to a net loss of Rs 221 crore wasn't about operational failure—it was about accounting. The culprit: higher depreciation charges linked to newly commissioned assets at Navi Mumbai airport and the copper manufacturing plant. These are non-cash expenses that don't affect operating cash flows but hit the profit statement hard.
Navi Mumbai airport, with an estimated capital outlay of Rs 15,500-19,300 crore, will add approximately Rs 595-765 crore in annual depreciation over a weighted average period of about 27 years. The copper manufacturing plant, requiring Rs 8,300-10,200 crore in investment, will contribute another Rs 555-730 crore annually over roughly 15 years. Combined, these two assets alone are adding Rs 1,150-1,495 crore to the depreciation burden each year.
This creates a temporary profitability squeeze. But here's the thing—depreciation is a fixed cost. As revenue ramps up at these assets, operating leverage kicks in. The airport is projected to handle 15 million passengers in FY26, growing to 48 million by FY30. The copper plant will scale production from 0.3 million tonnes to 1.0 million tonnes over the same period. Once these assets reach optimal utilization, the depreciation burden becomes spread across much larger revenue bases.
What makes SBI Mutual Fund's bet interesting is the fundamental shift in Adani Enterprises' business mix.
This isn't just a statistic—it's a complete transformation of the company's earnings profile.
Infrastructure and utility assets come with predictable characteristics. Regulated returns, long-term contracts spanning 15-30 years, and inflation-linked mechanisms provide earnings visibility that traditional conglomerate businesses simply can't match. Airports offer stable passenger fees and aeronautical charges. Road projects generate annuity income through HAM models. Energy transmission delivers regulated returns on equity. These businesses don't grow explosively, but they grow steadily and predictably.
This shift explains why GQG Partners increased exposure to Adani Energy Solutions and Adani Green Energy while reducing its Adani Enterprises stake. The pure-play utility businesses offer the regulated returns and cash flow visibility that foreign investors crave, without the execution complexity and capital intensity of a diversified conglomerate.
The block deal price of Rs 2,435.6 per share, at a 10.4% discount to the current market price of Rs 2,719, provides insight into investor expectations .
These multiples suggest investors are looking beyond near-term profitability pressure to the long-term cash generation potential of the infrastructure portfolio.
The valuation implies a trade-off between near-term pain and long-term gain. Investors are accepting depressed returns on capital over the next 2-3 years as new assets ramp up, in exchange for the prospect of 10-12% ROIC once the portfolio matures. The infrastructure-heavy model deserves a premium valuation to traditional conglomerates, but the market is still applying a discount until execution is proven.
The next 12-24 months will be critical for Adani Enterprises.
The copper plant should break even at 0.6-0.65 million tonnes of production, potentially by late FY27 or early FY28. As these assets cross these thresholds, the depreciation burden will remain constant while revenue accelerates, creating operating leverage that should drive margin expansion.
For foreign investors, the key triggers for renewed interest will be regulatory resolution—particularly the outcome of the US SEC case—and demonstrated execution capability on the commissioned assets. For domestic investors, the thesis is simpler: India's infrastructure boom is real, Adani Enterprises is positioned at the center of it, and current volatility creates buying opportunities.
The institutional handoff from GQG Partners to SBI Mutual Fund isn't a story of winners and losers. It's a story of different investors with different time horizons, risk appetites, and market perspectives making rational decisions based on their own mandates. What remains to be seen is whether the infrastructure transformation will deliver the stable cash flows that domestic investors are betting on, or whether the execution challenges and regulatory overhangs will continue to weigh on foreign investor sentiment. The next few quarters will provide the answer.
