Adani Group Stocks Plunge Amid $250 Million Bribery Allegations

The recent charges brought by US prosecutors against Gautam Adani, accusing him of involvement in a $250 million bribery scheme, have sent shockwaves through financial markets. The fallout has adversely impacted Adani Group stocks, banking shares, and businesses associated with the conglomerate. These allegations have caused significant declines in equities, bonds, and related securities, dampening overall market sentiment.

On November 21, shares of Adani Enterprises, Adani Green Energy, and Adani Energy Solutions plummeted by as much as 25% before rebounding slightly from their intraday lows. The Adani Group’s total market valuation dropped by ₹2.2 lakh crore in a single session. Other group companies, including Adani Ports, Adani Total Gas, and Ambuja Cements, also experienced substantial losses.

Separately, PSP Projects, a construction firm in which Adani Infrastructure recently announced plans to acquire a 30.07% stake, saw its stock decline over 9% to hit an intraday low of ₹609 before recovering marginally.

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Banking stocks were not spared, with major lenders to Adani Group companies bearing the brunt. Public sector banks, such as State Bank of India (SBI), Bank of Baroda (BoB), and Punjab National Bank (PNB), experienced declines of up to 7%. Broader indices like Nifty Bank and Nifty PSU Bank dropped between 1 and 3%, although private sector banks fared slightly better but remained in negative territory.

The repercussions were felt internationally as well. Adani’s dollar-denominated bonds saw sharp declines, with Bloomberg reporting that Adani Green Energy’s March-issued notes fell a record 15 cents, and Adani Electricity Mumbai’s 2030 bonds dropped by 8.6 cents. Moody’s has labeled the bribery allegations as “credit negative,” citing concerns over governance and potential challenges in accessing capital to meet liquidity needs.

In light of these developments, Adani Green Energy announced the cancellation of its planned $600 million bond issuance, attributing the decision to ongoing legal challenges. This cancellation disrupts the Adani Group’s broader debt management strategy, which has recently included measures such as prepaying ₹7,374 crore in share-backed loans and raising funds through a $1 billion qualified institutional placement and a $500 million share sale. Additionally, the group had intended to issue $1.5 billion in dollar bonds for refinancing by early 2025.

Meanwhile, US-based investment firm GQG Partners, a significant investor in Adani stocks, witnessed a 20% drop in its own stock price to AUD 1.98 on the same day. GQG reassured investors that 90% of its clients’ assets remain allocated to non-Adani issuers and stated that it is reviewing its exposure to the group.

While the markets responded negatively, Bernstein India downplayed the broader impact, describing the situation as a short-term issue. Venugopal Garre, the firm’s India research head, remarked that infrastructure-related controversies are often temporary and are typically forgotten over time. Nonetheless, benchmark indices Sensex and Nifty fell by up to 0.8% intraday, with Adani-related stocks driving the losses.