A historic downturn for Adani Group
November 21, 2024, marked a massive blow to Adani Group as its shares tumbled up to 23%, eroding ₹2.45 lakh crore in market capitalisation. The cause? Bribery and fraud charges brought against Gautam Adani, seven other executives, and associates by the US Department of Justice.
The fallout was swift and severe, with flagship stocks like Adani Enterprises and Adani Green hitting their lower circuits. This isn’t just a story about numbers; it’s a cautionary tale about governance, investor confidence, and market resilience.
Why are Adani shares falling?
US indictment details
The allegations against Gautam Adani and his associates are serious. According to US prosecutors:
- Over $250 million in bribes were allegedly paid to Indian government officials to secure solar energy contracts.
- The scheme aimed to generate $2 billion in profits over 20 years from renewable energy projects.
- False and misleading statements were made to raise funds from US and global investors.
The charges include conspiracy to commit securities fraud, wire fraud, and violations of the Foreign Corrupt Practices Act.
Group response
The Adani Group has denied all allegations, stating:
“The allegations made by the US Department of Justice and SEC against directors of Adani Green are baseless and denied. The Adani Group has always upheld the highest standards of governance and compliance.”
Despite the assurance, the market reaction has been anything but forgiving.
Market impact: How deep is the damage?
Stock performance
The impact on Adani Group stocks was dramatic, with significant losses across the board:
| Stock | Price Decline | Price (₹) |
| Adani Enterprises | -23% | ₹2,539.35 |
| Adani Ports | -20% | ₹1,670 |
| Adani Green Energy | -19.53% | ₹1,184.25 |
| Adani Total Gas | -18.14% | ₹589.9 |
| Adani Energy Solutions | -20% | ₹687.5 |
| Ambuja Cements | -17.59% | ₹290 |
| NDTV | -14.37% | ₹162 |
Market capitalisation loss
The sharp selloff wiped out ₹2.45 lakh crore from the group’s overall market cap, dropping it to ₹12.43 lakh crore from ₹14.88 lakh crore.
Adani bonds slump too
The crisis extended beyond equities, impacting Adani’s dollar-denominated bonds.
- Bonds issued by Adani Ports, maturing in 2027, fell over 5 cents on the dollar.
- Bonds from Adani Transmission dropped 8 cents, marking their steepest decline since February 2023.
These drops highlight a loss of confidence among both equity and bond investors.
Also Read: India’s port dominance: Adani Ports vs. JSW Infra analysis
The recurring shadow of governance issues
This isn’t the first time the Adani Group has faced scrutiny.
- In January 2023, short-seller Hindenburg Research accused the group of stock manipulation and improper use of tax havens.
- That report wiped out $150 billion in market value, highlighting the group’s vulnerabilities to governance concerns.
The latest allegations have reignited fears about transparency and accountability within the conglomerate.
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What should investors do now?
Short-term outlook
The turbulence is likely to continue as the legal battle unfolds. Investors may want to:
- Reassess holdings: Focus on stocks with strong fundamentals and limited exposure to governance risks.
- Monitor updates: Pay attention to developments from US courts and the Adani Group’s legal team.
Long-term considerations
While Adani’s core businesses in renewable energy and infrastructure remain strong, rebuilding trust with investors will take time and transparency. For risk-averse investors, it may be wise to stay cautious until the storm settles.
Lessons for the market
This episode underscores the importance of governance and accountability in maintaining investor confidence. For a conglomerate as influential as Adani, these allegations could lead to broader implications, including increased regulatory scrutiny and political fallout.
As the story unfolds, one question looms large: Will the Adani Group emerge stronger, or will these allegations mark a turning point for its dominance?
Takeaway Table: Key implications of the Adani shares crash
| Aspect | Details |
| Market Cap Loss | ₹2.45 lakh crore wiped out |
| Stock Declines | Shares fell up to 23%, hitting lower circuits |
| Bond Market Impact | Dollar bonds saw steep declines of 5-8 cents |
| Governance Concerns | Allegations of bribery, fraud, and misleading investors |
| Investor Sentiment | Significant dent in trust; long road to rebuilding confidence |
Conclusion: A critical juncture for Adani Group
The fall in Adani shares amid bribery allegations is a stark reminder of the risks associated with governance issues in high-profile companies. For investors, this serves as a wake-up call to scrutinise not just financial metrics but also the ethical practices of the organisations they back.
The next steps by the Adani Group will determine whether it can weather this storm or face lasting damage. One thing is clear: transparency and governance will be the key to regaining trust.
