Adani Enterprises Share Price Fell 10% Amid US Action on Bribery

Adani Enterprises Shares fell 10% with Adani Group Shares Steep Down to 20% on Thursday

On Thursday 21 November 2024, Adani Enterprises Shares price saw a decline of up to 10% in early trade after US Federal Prosecutors took up the alleged action on bribery against Gautam Adani, founder of the Adani Group connected to offering a bribe of $250 Million to Indian Officials securing solar energy contracts in India. The Adani Group Shares including Adani Enterprises, Adani Green Energy, and Adani Energy Solutions steep down to as much as 10-20%.(Source- Reuters)

The flagship company Adani Enterprises was locked at the lower circuit at Rs.2,539.35, lower by 10%. The stock has considerably improved from the stock’s post-Hindenburg Research corrections but is still way below its former maxima. 

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Other Adani Group Shares Prices Today

On Thursday's opening, the stocks of Adani Energy Solutions tumbled 20% to Rs.697.25, also hitting the lower circuit. Younger group companies like Adani Ports and Special Economic Zone, ACC, and Ambuja Cements too saw similar dips and hit their respective circuits, going down by over 20%. Other listed groups in the confines of Indian conglomerates such as Adani Total Gas, Adani Power, NDTV, Adani Wilmar, and Sanghi Industries saw declines between 10% and 20% during the intra-day trading session.

Adani Enterprises opened Thursday at Rs.2539.35 per share. The stock of Adani Ports and Special Economic Zones fell 10% to Rs.1670. Stocks of Adani Power Limited dropped almost 11% to Rs.467.4 each.

The share price of Adani Green Energy dropped 16% to Rs.1184.25, while Adani Total Gas dropped 12% to Rs.589.9. Airports conglomerate Adani Wilmar's FMCG shares also suffered, opening with Rs.310, i.e. 8% lower than its previous close.

What is the Case?

Share prices plunged sharply as US prosecutors accused Gautam Adani, with other executives, such as Sagar R Adani and Vneet S Jaain, of running a $250 million (around Rs 2,100 crore) bribery scheme. According to the charges, bribes were paid to win solar energy contracts in India.

Filed in Brooklyn, New York, the indictment charges that the scheme functioned by making false statements to US investors and violates federal laws. Furthermore, the group is accused of obstructing justice by deleting electronic records and misleading US regulatory and law enforcement agencies, including the Department of Justice, Securities and Exchange Commission (SEC), and the FBI. The US SEC's separate legal lawsuit against the Adani Group has increased the pressure.

Global Impact on Gautam Adani Securities (Damage to Adani and His Group Companies)

The ripples spilled over to the international securities issued by the Adani Group as the Indian stock market fared badly. Dollar bonds by Adani Green Energy in March 2023 sank by 15%, its biggest plunge on record, and those issued by Adani Electricity Mumbai, maturing in February 2030, declined by 8.6% on the dollar.

This marks the biggest drop in the group's debt paper since the Hindenburg Research report earlier this year; it had wiped out more than Rs.12 lac crore in the combined value of Adani Group stocks and bonds.

What's Next with Adani in the Case?

According to media reports, a New York judge has issued an arrest warrant for Gautam Adani after he was indicted in the United States for allegedly engaging in a multibillion-dollar fraud conspiracy. This warrant on Adani will be given to foreign law enforcement authorities. (Source- ABC News on quoting Court Records, Inputs Taken from The Hindu).

US Bribery Case Allegations: How Adani has Responded? 

Adani Green Statement on US Bribery Case Allegations -“The US Department of Justice and the US Securities and Exchange Commission have issued a criminal indictment and brought a civil complaint, respectively, in the US District Court for the Eastern District of New York, against our Board members, Gautam Adani and Sagar Adani. The United States Department of Justice has also included our Board member, Vneet Jaain, in such criminal indictment. In light of these developments, our subsidiaries have presently decided not to proceed with the proposed USD-denominated bond offerings.”

Adani’s Debt Reduction Efforts And Fraud Allegations

The allegations of bribery come as the Adani Group has made efforts to reduce its debt burden and secure its financial position. The group in March 2023 repaid share-backed loans of Rs.7374 crores and promised to end any such financing by the end of the month due to fears about its high level of borrowing.

More recent fundraising activities include Qualified Institutional Placement (QIP) of $1 billion by Adani Energy Solutions in August 2024. It was oriented towards supporting debt reduction and building power infrastructure. In October 2024, Adani Enterprises raised $500 million through the share sale for new energy projects, the construction of a PVC plant, and debt repayment in its airports segment.

The group is also targeting to raise at least $1.5 billion by way of dollar bond issuances under Adani Green Energy and Adani Energy Solutions by the early part of 2025. The proceeds of these funds will be used primarily for the refinancing of the existing debt

Impact on Indian Stock Market

Equity benchmark indices Sensex and Nifty crashed in early trade on Thursday owing to massive Adani group stocks meltdown and ongoing FII outflows. The BSE benchmark Sensex plunged by 468.17 points and reached 77,110.21 in early trade. The NSE Nifty fell by 179.75 points reaching 23,338.75.

(Inputs taken from PTI)

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