Bribery charges against Gautam Adani: Is the collapse of Group shares an opportunity for investors?

Analysts on Dalal Street suggested choosing some shares of the Adani Group after witnessing a massive correction on the domestic stock market. The combined market capitalization of the group’s 10 listed stocks fell by more than Rs 2 crore after Adani Group chairman Gautam Adani was indicted in the US on bribery and fraud charges.

Following the news, shares of Adani Energy Solutions were trading 20% ​​lower at Rs 872 in afternoon trade on Thursday. Adani Enterprises, Adani Green Energy and Adani Ports and Special Economic Zone fell 19%, 18% and 14% respectively.

The Adani Group spokesperson, in a note, said the allegations made by the US Department of Justice and the US Securities and Exchange Commission against Adani Green executives are baseless.

So is it the right time to buy Adani Group shares? Abhishek Jain, head of research, Arihant Capital Markets, said, “This could be an opportunity to selectively bring in some strong names within the group. Stocks like Ambuja Cements, Adani Ports and ACC stand out as relatively more stable bets, offering potential long-term value amid volatility.

“Adani Power and Adani Wilmar could also be considered by high-risk investors, albeit cautiously, as they carry a higher degree of risk. However, when it comes to Adani Enterprises, given its high risk-reward nature, it may be prudent to avoid it at this stage,” said Jain.

Adani Total Gas, Ambuja Cements, Adani Power, Adani Wilmar, New Delhi Television and ACC were also down somewhere between 7%-12% around 1.20 pm (IST).

Vinod K Jhaveri, analyst, Pure Technicals, said, “All shares of Adani are reacting to the news. Technically, among listed Adani stocks, Adani Ports offered a good opportunity for investors as it touched 200-WEMA around Rs.995. Other Adani shares will continue to behave and react to subsequent news flow. As investors, such news and panic provide a good opportunity for investors who are fans of Adani stock,” Jhaveri said.

US authorities previously said Adani and seven other defendants, including his nephew Sagar Adani, allegedly paid bribes to Indian government officials to secure contracts expected to generate $2 billion in profits over 20 years and develop the largest solar power plant project in India. A judge has issued arrest warrants for Gautam Adani and Sagar Adani, and prosecutors plan to turn those warrants over to foreign law enforcement, U.S. court records show.

Prosecutors also said Adanis and another Adani Green Energy executive, former CEO Vneet Jaain, raised more than $3 billion in loans and bonds while hiding their corruption from lenders and investors. Gautam Adani, Sagar Adani and Jaain were charged with securities fraud, conspiracy to commit securities fraud and conspiracy to commit wire fraud, and the Adanis were also charged in a Securities and Exchange Commission civil case from the USA.

For clarification, the Adani Group in a note said, “The Adani Group has always supported and is strongly committed to maintaining the highest standards of governance, transparency and regulatory compliance in all jurisdictions of its operations. We assure our stakeholders, partners and employees that we are a law abiding organization fully compliant with all laws.”

Jathin Kaithavalappil, Deputy Vice President, Choice Broking, said: “I see the bribery allegations leveled against the chairman and senior officials of the Adani Group as a negative development for the group companies. This raises governance issues that are detrimental to investor confidence, their availability of funding options and overall market sentiment. In the absence of such unambiguous statements on this issue, I believe that stocks will remain under almost continuous pressure as market players take into account the prevailing circumstances where the level of scrutiny has increased considerably.”