Santosh Hegde’s censure hits Adani share prices, cuts market cap by Rs22,000 crore

It was a day of bad news not only for BJP in Karnataka but for Gujarat business-giant Adanis too. In his report exposing illegal mining in Karnataka, Lok Ayukta justice Santosh Hegde has indicted Gujarat-based Adani Enterprises for having paid “bribes for getting undue favour for illegal exports”.

Adani Enterprises has port facilities in Karnataka which, the report alleges, were used for illegally exporting iron ore. The Lok Ayukta has accused the company of forging permits to transport iron ore.

The report has recommended blacklisting of the company and barring it from any future contracts, grant or lease by the government.

“Action should be initiated against the company to cancel the lease granted at Belekeri port,” the report says.

Following media reports about the Lok Ayukta’s adverse remarks, the market cap of Adani Enterprises fell 21% by Rs 22,177 crore in 150 minutes.

Along with Adani Enterprises, the share prices of the other two companies of the group, Adani Power and Mundra Port & Special Economic Zone (MPSEZ), also fell by 11.66% and 7.14%
respectively.

Overall, the total market capital of the three companies of Adani Group crashed by Rs22,177 crore, in just 150 minutes. After 1 pm, the share price started falling and by 3.30 pm on Friday, it was down by 114 points.

From day’s high Rs741.10 per share, the stock price of Adani Enterprises fell by Rs191 to the day’s low of Rs550 per share. However, it regained later to close at Rs586.10 per share.

Compared to Thursday’s closing, the three companies of Adani Group - Adani Enterprises, Adani Power and MPSEZ -  their total market capital fell from Rs1,37,082.66 crore by 16% (or Rs22,177.14 crore) to Rs1,14,905.52 crore by the time markets closed on Friday.

Adani Enterprise, which fell by 21%, witnessed a fall of Rs17, 10754 crore in its market capital while the market capital of Adani Power and MPSEZ fell by Rs2,855 crore and Rs2,213 crore, respectively.  Interestingly, retail participation in all the three companies is very low. Hence, retail investors lost Rs352.41 crore.     

In Adani Enterprises, investors lost Rs192 crore while in other two companies, the loss accounts of Rs160 crore.

"The current situation does not look good for Adani Enterprises. After the mining scam, no one knows where Adani Enterprises will land. If the report is true, it seems the central government might impose a penalty on the company though it may not be banned from mining," said associate vice-president of India Infoline Ltd, Mahendra Prajapati. 

Share prices of Adani Group are expected to fall further on Monday, said vice-president, Angel Broking Limited, Sandeep Bhardwaj.

"On Friday, it was just a knee-jerk reaction to the reports of Adani Enterprise being involved in the mining scam in Karnataka. But nothing is very clear for it. When markets open on Monday, share prices of Adani Group are likely to fall further. That is the normal reaction," he said.