Adani stocks: Gautam Adani-led conglomerate witnessed a major blow on Thursday after all group companies plummeted by nearly 20 per cent. The sell-off sentiment took over investor mood after the group chairman and his nephew, Sagar Adani, alongside 6 others were allegedly accused of paying Rs 2,029 crore ($265 million) in bribes to Indian government officials.
The flagship firm of the conglomerate, Adani Enterprises, witnessed the sharpest decline of almost 24 per cent to settle at Rs 2,160 on Thursday. Adani Energy Solutions also experienced a similar drawdown, as the share price concluded the trading session at Rs 697.25, down by 20 per cent on the National Stock Exchange.
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As per the US prosecutor's official statement, Gautam Adani bribed government officials to secure “lucrative solar energy supply contracts” with state electricity distribution companies. These contracts were expected to generate more than $2 billion in profits after tax over an estimated period of 20 years.
What turned out to be even worse for the conglomerate was that the brunt of the legal scrutiny fell entirely on Adani's renewable arm, Adani Green Energy, where the group had been investing aggressively.
Just a few years back, Adani bagged the world's largest solar project, a $6 billion deal to produce 25 GW of power by 2025. But the recent FBI allegations seem to have thrown the project into some serious trouble ground now. The building-up tensions around the conglomerate were quite evident when its green arm cancelled the $600 million bond plan post the allegations.
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What was worth noting about the event was that the bond had already been priced but had to be pulled.
Rewind for the markets?
When the US-based short-seller Hindenburg initially brought-in allegations against the conglomerate last year, it was followed by a sharp drop in all the group stock prices.
And it wasn't just any decline.
It was a pure bloodbath.
But in less than a year, nearly all Adani stocks not only bounced back to their initial prices but also reached new 52-week highs.
The second time Hindenburg targeted the Gautam Adani-led firm, there was absolutely no market reaction. This signaled the level of confidence investors had developed in the conglomerate.
However, this time, it's not just any private institution raising fingers at one of India’s most valued conglomerates but international government officials. While the Adani Group has already called the allegations "baseless," it's important to note that it's the FBI on the other side of the table and not just any short-seller research firm.
Nearly all shares witnessed a double-digit fall post the allegations. Adani Power, Adani Total Gas and Adani Wilmar experienced a decline of around 10 per cent. Adani Ports and SEZ also witnessed a similar drop and concluded the day at Rs 1,119.05, down by over 13 per cent on the bourses.
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