Stocks and bonds of Adani companies fell on Monday amid news reports that US prosecutors have widened their probe to investigate whether an Adani company, or people linked to it, including group chairman Gautam Adani, were involved in a pay off to officials in India for “favourable treatment on an energy project”.
A stock selloff in all 10 Adani companies listed on local exchanges led to the group companies collectively losing about ₹25,500 crore in market capitalisation by the close of Monday’s trading session. Dollar bonds of group companies such as Adani Green, Adani Ports and Special Economic Zone, Adani Transmission, and Adani Renewable Energy RJ Ltd slipped around 2%, eroding some of the gains in recent months.
According to US laws, federal prosecutors can look into foreign bribery and corruption allegations if the cases have links to American investors and markets. Such investigation on any company can impact the future price at which debt can be raised in international markets.
“The news of recent investigation comes after renewed investor confidence that was seen when Adani Green Energy raised $409 million after a year that was marred by Hindenburg’s allegations of fraud and stock manipulation. While the (dollar) bonds recovered in the second half of the day, the market would closely track the papers,” said a senior debt market official.
Though Adani stocks have rebounded since the Hindenburg report released on January 25, 2023, six of the group’s stocks are still trading below their pre-Hindenburg price.On Monday, Adani Total Gas fell the most, dropping 4.2% to close at ₹947.25 while Adani Energy Solutions fell 3.5% to ₹1,009. Shares of Adani Enterprises, the group flagship, was down half a per cent while shares of Ambuja Cements, ACC, NDTV, and Adani Wilmar declined more than 2%.Since February 2, 2023, the market capitalisation of the group has surged by over ₹8.8 lakh crore. However, the ₹15.51-lakh crore market-cap recorded on Monday was ₹3.69 lakh crore lower than the high of January 24, 2023.
Earlier this month, many in the market felt that the worst was over for the group after Adani Green received bids of more than $3 billion for a 18-year paper from several investors.