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NFC LIC > Finance > Gautam Adani Will Go to Jail for Bribery & Fraud Case? | What Will Happen to Adani Stocks?
Finance

Gautam Adani Will Go to Jail for Bribery & Fraud Case? | What Will Happen to Adani Stocks?

Adani Group Under Fire: What Lies Ahead for Investors and Stocks?

NAUSHAD AHMAD
Last updated: November 23, 2024 3:10 pm
NAUSHAD AHMAD
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6 Min Read
Gautam Adani Will Go to Jail
Gautam Adani Will Go to Jail
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The Adani Group, led by Gautam Adani, is once again under scrutiny. From the Hindenburg allegations in January 2023 to the latest accusations by the U.S. Department of Justice (DOJ), AdaniтАЩs companies have faced turbulent times. This article delves into the recent bribery and fraud allegations, their implications on AdaniтАЩs businesses, and the potential impact on stock and bond markets.

Contents
The Bribery and Fraud AllegationsImpact on Adani Group StocksThe Bigger Picture: Bonds & Credit RatingsIs This Another Harshad Mehta-Like Scam?What Should Investors Do?Lessons from the Hindenburg EpisodeA Word on BondsConclusion: What Lies Ahead for Adani?Also Read: How to Submit LIC Life Certificate Online in 2024 | LIC Digital App Guide10%off, especially for you

The Bribery and Fraud Allegations

The U.S. DOJ has accused Adani and seven others of engaging in bribery and fraud. Allegedly, Adani Green Energy provided bribes worth $265 million (approximately тВ╣2,177 crore) to Indian government officials to secure solar energy projects with the potential to generate $2 billion in profits.

Key highlights of the allegations:

  • Bribes Paid: $265 million.
  • Purpose: Securing solar projects to earn substantial profits.
  • Evidence Presented: Spreadsheets, presentations, and mobile device data.

These allegations come with claims of manipulating financial projections to foreign investors, raising funds in the U.S., and hindering investigations by agencies like the FBI and the U.S. Securities and Exchange Commission.

Impact on Adani Group Stocks

Gautam Adani Will Go to Jail
Gautam Adani Will Go to Jail

The news has triggered massive corrections in Adani Group stocks:

  • Adani Green Energy: Down 17%.
  • Adani Energy Solutions: Down 20%.
  • Adani Enterprises: Hit the lower circuit, down 20%.
  • Ambuja Cement & ACC: Down 10% and 7%, respectively.
  • Adani Ports: Down 12.5%.
  • Adani Wilmar & Adani Power: Both down 10%.

This isnтАЩt the first time AdaniтАЩs shares have faced such volatility. During the Hindenburg episode in January 2023, Adani Green fell 80% from its peak but later bounced back, rewarding patient investors with nearly 400% returns.

The Bigger Picture: Bonds & Credit Ratings

The shockwaves arenтАЩt limited to equities; AdaniтАЩs bonds have also taken a hit, declining by 10%. Credit rating agencies like MoodyтАЩs have downgraded Adani GroupтАЩs outlook to negative, raising concerns about its ability to repay debts. A bondholder with тВ╣1 crore may now see their investment reduced to тВ╣90 lakh overnight. Such moves highlight the growing uncertainty around AdaniтАЩs financial stability.

Is This Another Harshad Mehta-Like Scam?

Many have drawn parallels between this case and Harshad MehtaтАЩs infamous scam. However, thereтАЩs a fundamental difference:

  • Harshad Mehta was accused of manipulating stocks without backing businesses.
  • Adani, on the other hand, runs real businesses like ports, cement, and energy, which are integral to IndiaтАЩs infrastructure.

This makes the situation complex. While allegations of fraud and inflated valuations persist, AdaniтАЩs businesses remain tangible and functional.

What Should Investors Do?

For investors, this is a critical time:

  1. Understand the Business: AdaniтАЩs companies are real businesses with tangible assets. If you believe in their long-term growth, staying invested might be a viable option.
  2. Be Cautious: Given the high valuations (e.g., Adani GreenтАЩs P/E ratio at 198), itтАЩs essential to tread carefully.
  3. Avoid Panic Selling: Historical trends show that Adani stocks have rebounded after corrections.
  4. Futures & Options: While derivative trading might seem attractive, inflated options pricing could lead to losses. Only trade if youтАЩre confident and experienced.
  5. Diversify: DonтАЩt put all your eggs in one basket. Ensure your portfolio is balanced across sectors.

Lessons from the Hindenburg Episode

The Hindenburg report in January 2023 alleged overvaluation and governance lapses, leading to a massive sell-off. However, AdaniтАЩs stocks eventually recovered, rewarding those who invested at the bottom. Investors must note that stock corrections, while painful, can present buying opportunities if the underlying business is strong.

A Word on Bonds

AdaniтАЩs bondholders have seen a 10% drop in value due to credit downgrades. Bonds are typically considered safer investments, but when the issuerтАЩs credibility is questioned, even bonds can lose value. This serves as a reminder to evaluate the issuerтАЩs creditworthiness before investing.

Conclusion: What Lies Ahead for Adani?

The allegations against Gautam Adani and his group are serious, but until proven guilty, they remain allegations. The Adani Group has reiterated that all defendants are presumed innocent unless proven guilty in court.

For investors, this is a moment of patience and prudence. AdaniтАЩs real businesses might cushion the blow of these allegations, but the stock and bond markets will remain volatile in the near term. As always, do your research and consult financial experts before making investment decisions.

Engage With Us
What do you think about the allegations against Adani? Will the stocks bounce back, or is this the start of a larger crisis? Share your opinions in the comments below. If youтАЩre new to stock markets and want to start investing or trading, check out this link for free Demat account openings and referral opportunities.

Also Read: How to Submit LIC Life Certificate Online in 2024 | LIC Digital App Guide

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TAGGED:Adani BondsAdani Bribery AllegationsAdani EnterprisesAdani Fraud CaseAdani Green EnergyAdani GroupAdani News Updateadani portsAdani Share PriceAdani StocksBusiness Fraud CasesCorporate ScandalsFinancial ScandalsHindenburg ReportIndian stock marketInvesting TipsLong-term Investment StrategiesStock Market Analysisstock market newsUS Department of Justice

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