Adani Group shares rally for 2nd day; Adani Green, Total Gas zoom up to 19%

At 11:09 am; Adani Total Gas was trading 14% higher, while Adani Green and Adani Energy Solutions were locked in the 10% upper circuit, as compared to nearly 1% decline in the BSE Sensex.

Shares of Adani Group companies were trading higher for the second straight day, and rallied up to 19 per cent on the BSE in Thursday’s intra-day trade after the group company Adani Green Energy clarified Wednesday that allegations against Gautam Adani, Sagar Adani, and senior executive Vneet Jaain under the US Foreign Corrupt Practices Act (FCPA) by the US Department of Justice (DoJ) were “incorrect.” However, the company acknowledged that the executives face three other charges, including securities and wire fraud, in the indictment.

 

Adani Total Gas (19 per cent at Rs 823.30), Adani Energy Solutions (10 per cent at Rs 727.35), Adani Power (11 per cent at Rs 583.75) and Adani Green Energy (10 per cent at Rs 1,088.20) gained between 10 per cent and 19 per cent in intra-day trades. Adani Enterprises surged 5 per cent to Rs 2,526, while, Adani Ports, Adani Wilmar and Ambuja Cements were up in the range of 1 per cent to 3 per cent. In the past two trading days, these stocks gained up to 44 per cent from the recent lows.

 

 

At 11:09 am; Adani Total Gas was trading higher by 14 per cent, while Adani Green and Adani Energy Solutions were locked in the 10 per cent upper circuit. The remaining stocks were trading higher in the range of 1 per cent to 8 per cent. In comparison, the BSE Sensex was down nearly 1 per cent.

 

The Department of Justice (DoJ) indictment, which has five counts or charges, does not have any mention of Chairman Gautam Adani, Executive Director Sagar Adani, or Managing Director and Chief Executive Officer Vneet Jaain and excludes them in count one: “Conspiracy to Violate the FCPA”. Neither does it have any mention of these three names in count five: “Conspiracy to obstruct justice”.

 

The development follows bribery charges filed last week by the US Securities and Exchange Commission (SEC) in a New York district court against the group’s founder, Gautam Adani, and seven others in connection with projects under Adani Green Energy.

 

Post development, two global rating agencies, Moody’s and Fitch, downgraded the outlook for several Adani group companies from “stable” to “negative” on Tuesday, citing escalating legal and governance risks. Fitch also placed certain Adani firms under the “Rating Watch Negative (RWN)” status.

 

Whenever a rating agency downgrades a stock, investors may become concerned. Adani group stocks have been more volatile particularly due to regulatory scrutiny and investors sentiments. The forecast for the foreseeable future is still unclear, according to CA Jashan Arora, Wholetime Director & Promoter, Master Trust Group.

 

Before making any investment decisions, investors are encouraged to keep a careful eye on court cases and assess the group's financial standing. Think about your risk tolerance if you plan to stay in the short term. It might be appropriate to minimize exposure or to book losses if the downgrade has drastically affected your risk-reward ratio. Long-term prospects for the company remain strong; therefore it could be worthwhile to invest in this downturn. Make sure, though, that this fits your risk tolerance and investment approach, Jashan Arora said.

 

Meanwhile, following the US indictment of billionaire Gautam Adani, International Holding Co (IHC), the Abu Dhabi conglomerate said, their outlook on investments in India's Adani Group remains unchanged. In October last year, IHC boosted its stake in Adani Enterprises to more than 5 per cent after it sold down its investments in two other Adani companies.

 

"Our partnership with the Adani Group reflects our confidence in their contributions to the green energy and sustainability sectors," IHC said in a statement on Wednesday, the Reuters reported. "As with all our investments, our team continues to evaluate relevant information and developments. At this time, our outlook on these investments remains unchanged," the news agency reported.

 

In another development, Reuters quoting a senior official at the ports authority reported that Tanzania plans to honour its contracts with an Adani Group unit despite a US indictment of its billionaire chairman Gautam Adani on accusations of bribery and fraud.

 

Senior advocate and former attorney general Mukul Rohatgi stated on November 27 that neither Gautam Adani nor his nephew has been accused of violating the US FCPA in the indictment filed by US prosecutors in a bribery case. CLICK HERE FOR FULL REPORT