Adani Group stocks: The market capitalisation of Adani Group stocks plunged by Rs 2.24 lakh crore, equivalent to $26 billion, following accusations by US authorities against Gautam Adani, his companies and executives regarding bribery and fraud on Thursday.
The US Department of Justice‘s (DoJ) allegations against the Adani Group could restrict access to public markets, as international financial institutions and investors are likely to maintain distance until case resolution, say experts.
Financial experts indicate that whilst the group faces no immediate repayment obligations, public market access might remain restricted for several months.
Adani Group stocks: What’s the outlook?
Market experts have differing views on Adani shares’ future.
“Retail investors should stay away from Adani stocks until the situation stabilises,” advises Apurva Sheth, head of research at Samco Securities. “Only those comfortable with high risk should consider these shares while we await further developments.”
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Sheth added that even if allegations are resolved, share prices might remain range-bound without reaching new peaks soon.
Market analysts indicate that investors are apprehensive about potential substantial settlements the group might need to pay to US authorities.
“The severity of charges by US authorities has raised corporate governance concerns among investors,” explained Hemang Jani, founder-director at equity advisory firm Finazenn. “However, investors are more worried about the persistent negative developments surrounding the group.”
The new allegations have surfaced less than two years after US short-seller Hindenburg published a critical report in January 2023, causing Adani share prices to decline significantly. The short-seller alleged the conglomerate of ‘brazen stock manipulation’ and ‘accounting fraud’.
However, Deven Choksey, founder and MD of DRChoksey FinServ has expressed optimism about recovery in stock prices and advises retail investors to maintain their positions.
Financial experts disagree about the long-term effects of these bribery allegations. SKI Capital analysts suggest that whilst a settlement might bring stability, the group could face continued challenges in accessing international funding.
Also Read | Adani US indictment: How the bribery drama allegedly unfolded
“While Adani Group has options through appeals and settlements,” stated Narinder Wadhwa, Managing Director of SKI Capital, “reputation damage and increased oversight might restrict their ability to secure major international investments.”
During a media session with Goldman Sachs’s emerging markets equity strategist, their analyst confirmed close monitoring of Adani Group developments. He noted that US DOJ indictments and SEC investigations against group executives negatively impact investor confidence.
DoJ has filed charges against billionaire Gautam Adani, his nephew Sagar Adani, and six additional individuals for alleged involvement in a corruption scheme valued at thousands of crores of rupees, deceiving US investors, and impeding investigation—creating significant legal and reputational challenges for the prominent Indian conglomerate.
The New York district court and Securities and Exchange Commission (SEC) have issued both criminal and civil charges, potentially resulting in substantial monetary penalties and profit recovery, whilst remaining open to settlement arrangements. The Federal Bureau of Investigation (FBI) participated in the investigation.
Adani Group has rejected all allegations and confirmed its intention to seek legal recourse.