Adani Ports slumps 20%: Key cash generator under scrutiny amid bribery allegations

Adani Ports and Special Economic Zone, a critical revenue driver for the Adani Group, faced a sharp 20% decline on Thursday, at Rs 576. This steep drop came in the wake of US prosecutors indicting Gautam Adani and senior executives for alleged bribery and fraud.

The charges accuse the group of paying $265 million in bribes to Indian officials to secure solar energy contracts, expecting returns of $2 billion over two decades.

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The legal blow has amplified concerns around the group's governance, with Moody’s terming the development “credit negative.” The rating agency highlighted potential challenges in accessing liquidity and managing capital requirements.

Market sentiment soured further as bonds tied to Adani Ports saw significant declines, with 2027 dollar-denominated debt dropping over five cents. The indictment also implicated executives in misleading lenders and investors, eroding global investor confidence.

Adani Ports has been a linchpin in the conglomerate’s portfolio, generating steady cash flows from its robust port operations across India. However, the current crisis has put its long-term growth plans under question. GQG Partners, a major Adani investor, announced it is reviewing its exposure, hinting at possible portfolio adjustments.

The stock's performance underscores growing market scepticism following the Hindenburg report earlier this year. Analysts advise investors to adopt a wait-and-watch approach as legal proceedings unfold, and the group attempts to regain its footing amidst intense scrutiny.