Adani Group stocks had a rollercoaster trading session on November 22, rebounding sharply after falling by about 10% in early trades. Adani Green Energy surged more than 6 per cent, while Adani Enterprises rallied nearly 4%. Adani Power gained more than 3%, while Adani Ports added more than 2%.
It followed a sharp 23 per cent decline on Thursday, November 23, driven by intensified controversies surrounding the group. U.S. prosecutors indicted Adani Group Chairman Gautam Adani, his nephew Sagar Adani, and others on charges of orchestrating a $265 million bribery and fraud scheme to expand the group's solar energy business.
Adani Group's Compounding Troubles:
The U.S. alleges that the Adani Group conspired with former executives of a New York-listed company to bribe Indian government officials to attain business contracts. The Adani Group has vigorously denounced the allegations as "baseless," and Indian government officials remain silent on the matter.
Adding to the group’s challenges, Kenyan President William Ruto announced the cancellation of two major projects involving Adani Group companies. These include a procurement process for expanding Nairobi’s main airport and a $700 million project for building power transmission lines.
Investor Sentiment and Expert Opinions:
It faces a difficult road ahead as it tackles mounting legal woes and an eroding perception of governance standards. While some of its stocks did well during the day's trade, the long-term implications of the allegations could weigh heavy on investor sentiment and prospects for the group's operations.
Allegations against the Adani Group have brought immense challenges for the conglomerate as sustained pressure has been mounting on the respective group's stock. Governance issues and regulatory attention increase uncertainty for investors.
An expert opinion is unanimous, as they advise being very cautious, where one needs to watch the day-to-day legal outcome, check the comfort level of a broader market condition, and then decide. Long-term gain opportunities will definitely arrive, but near-term risks demand a careful approach to diversified investments.
Jathin Kaithavalappil, Assistant Vice President, Choice Broking:
"Bribery accusations have hurt investor confidence, where it can even not let the group access finance at an optimal level, which would weaken market sentiments further. The overall governance issues remain unsolved, and increased scrutiny may lead to continued pressure on the Adani Group stocks.".
These issues could erode investor confidence, curtail financing options, and dampen market sentiment. With heightened scrutiny and uncertainties pending resolution, stocks in the group are likely to remain underperformers for the near term and increase risks to stakeholders," he said.
Disclaimer: The views and recommendations provided above are those of individual analysts or broking companies, not of ICFM. We advise investors to seek certified opinions before making any investment decisions.
