Adani Group Shares Dropped After Rating Agency Fitch Puts Some Group Bonds On Watch

Bad news seems to continue for the Adani group after its group stocks fell by seven per cent after rating agency Fitch said that it has put some group bonds under watch considering the US bribery charges.

Adani Green Energy’s share price saw the maximum decline, as it fell by seven per cent. This was followed by Adani Energy Solutions which dipped five per cent.

Shares of Adani Enterprises went down nearly four per cent, while Adani Total Gas, Adani Power, and Adani Wilmar each dipped three per cent. Adani Ports and Ambuja Cements stocks also fell around two per cent each. ACC and NDTV shares dropped by one per cent each.

Fitch Ratings has downgraded the outlook for four Adani Group entities to "Negative" and placed three under "Rating Watch Negative" due to recent bribery charges against board members of Adani Green Energy. A Fitch Ratings downgrade signals increased financial risk for a company. This can lead to higher borrowing costs as lenders demand higher interest rates to compensate for the elevated risk. Additionally, investors may become less willing to invest, making it harder for the company to raise capital. This can impact the company's ability to invest in growth, repay debts, and maintain its operations. Moreover, a downgrade can negatively affect the company's reputation, potentially leading to lost business opportunities and customer erosion.

"Rating watch negative (RWN) on Adani Ports and Special Economic Zone, North Queensland Export Terminal Pty Ltd, and Mumbai International Airport Limited reflects increased corporate governance risk and potential contagion risk that could impact funding access and liquidity of the rated entities if corporate governance risk materializes following the US indictment," Fitch Ratings said.

Certain board members of Adani Green Energy have been indicted by the U.S. Securities and Exchange Commission SEC and Department of Justice (DoJ). “ "Two of the indicted board members belong to the founding shareholders of Adani group, which effectively own a majority of shares in all rated group entities (except AICTPL). These directors also serve on the boards of most other rated entities, raising contagion risk and renewing governance concerns across the group," it noted.

It is to be noticed that the group has also recently faced scrutiny and controversy, particularly after the release of the Hindenburg Research report, which accused the group of accounting fraud and stock manipulation.