Shares of Adani Group companies tumbled as much as 23 per cent during the trading session on Thursday after the US District Court and the Securities & Exchanges Commission framed bribery charges against Gautam Adani and other executives of the group.
Following the update from the New York Court, Gautam Adani's led entities, mainly, Adani Enterprises Ltd and Adani Ports, tumbled up to 23 per cent during the session. All the 10 listed Adani Group companies wiped out a cumulative of 2.81 lakh crore from investors' kitty as their total market capitalization dropped to Rs 11.43 crore for the day.
Experts suggest this sharp correction may be seen as an opportunity to buy as they might have missed the Hindenburg crash, but a few other analysts have divided views on the counter. Some suggest that investors should avoid any kind of bottom-fishing in the Adani Group counters, while others suggest that investors with higher risk appetite may look at these high-beta stocks.
"The accusations of bribery brought against Adani Group’s Chairman and senior officials as a negative development for the group’s companies. This raises issues of governance that are detrimental to the confidence of the investors, their availability of finance options, and the overall market sentiment," said Jathin Kaithavalappil, Assistant Vice President at Choice broking.
"In the absence of such unambiguous statements on the issue, I consider the stocks are likely to remain under pretty much continuous pressure as market players bear in mind the prevailing circumstances where the level of scrutiny has risen considerably," he added.
"For investors considering whether to 'catch the falling knives,' this could be an opportunity to enter certain fundamentally strong names within the group selectively, said Abhishek Jain, Head of Research, Arihant Capital Markets. Stocks like Ambuja Cements, Adani Ports, and ACC stand out as relatively stable bets, offering potential long-term value amidst the volatility, he further said.
"Adani Power and Adani Wilmar could also be considered high-risk investors as these carry a higher degree of risk. However, when it comes to Adani Enterprises, given its high-risk, high-reward nature, it may be prudent to avoid it at this stage. Investors need to assess their risk appetite and take a measured approach, considering the current market conditions and the inherent volatility of Adani Group stocks," Jain also said.
Adani Enterprises and Adani Ports & Special Economic Zone Ltd plunged up to 23 per cent each on Thursday. These two Nifty50 constituents contributed nearly Rs 1.38 lakh crore or 50 per cent in the mcap fall. Adani Energy Solutions Ltd and Adani Green Energy Ltd were down up to 20 per cent each.
Kranthi Bathini, Director of Equity Strategy at Wealthmills Securities, said Adani stocks have always been in the limelight, but these counters are not suited for everyone. "Investors with a very high risk appetite, who are ready to accept the volatility, should consider these stocks," he said.
Other Adani Group stocks including Adani Power Ltd, Adani Wilmar Ltd, Adani Total Gas Ltd, Ambuja Cements Ltd, ACC Ltd and New Delhi Television Ltd were seen crashing 10-17 per cent during the day.
Sugandha Sachdeva, Founder of SS WealthStreet, advised caution regarding Adani Group stocks, suggesting that investors should refrain from speculative activity for the time being. "The sentiment surrounding these stocks has been dampened, and the ongoing case could prolong market uncertainty. Additionally, valuations of these stocks are currently stretched, leaving an unfavorable risk-to-reward ratio for investors.”
She further added, "We anticipate a potential correction of 10-15% amid the ongoing selling pressure, which could create more attractive entry points for investors. While the fundamentals of these companies remain strong, it is advisable to avoid speculative buying at this stage. Investors may consider entering these stocks once the market stabilizes and the group’s stock prices exhibit greater resilience."