Adani Enterprises removed from Dow Jones Sustainability Indices; stock down

Shares of Adani Enterprises fell 20% in opening trade on Friday after S&P Dow Jones Indices said it will remove the Gautam Adani-led infrastructure major from its sustainability indices with effect from February 7, 2023.

Adani Enterprises will be removed from the Dow Jones Sustainability Indices following a media and stakeholder analysis triggered by allegations of stock manipulation and accounting fraud, the S&P Global-owned index provider says in a statement.

Reacting to the development, shares of Adani Enterprises, the Adani Group’s flagship company, fell 20% to ₹1,252 apiece on the National Stock Exchange (NSE). The stock has lost 59% over the last five sessions.

This comes hours after the NSE put three Adani Group companies — Adani Enterprises, Adani Ports and Ambuja Cements — under the short-term additional surveillance measure (ASM) framework. The move aims to safeguard the interest of investors amid extreme volatility.

On Wednesday night, the board of Adani Enterprises called off its fully subscribed follow-on public offer (FPO) in order to insulate investors from any potential financial losses.

"Given these extraordinary circumstances, the company's board felt that going ahead with the issue will not be morally correct. The interest of the investors is paramount and hence to insulate them from any potential financial losses, the Board has decided not to go ahead with the FPO," Adani said in a video message to investors.

Meanwhile, the selloff in Adani Group stocks continued on Friday with most companies hitting their lower circuit. Shares of Adani Green Energy and Adani Transmission fell 10% each to ₹935 and ₹1,396 apiece on the NSE. Adani Total Gas, Adani Power and Adani Wilmar dropped 5% each to ₹1,622, ₹191 and ₹399.

Adani Ports & SEZ erased 8% to ₹421, while Ambuja Cements was down 2% to ₹343 apiece.

On Thursday, Citigroup's wealth unit reportedly stopped extending margin loans to its clients against securities of Adani Group.

Gautam Adani, who overtook Amazon founder Jeff Bezos to be the second richest person last year, has lost over $59 billion of his personal wealth due to a fall in the conglomerate’s market cap.

To soothe frayed nerves of jittery investors, Adani, in his video message, said the decision to scrap the Adani Enterprises FPO will not have any impact on the company’s existing operations and future plans. “We will continue to focus on long term value creation and growth will be managed by internal accruals. Once the market stabilises, we will review our capital market strategy,” the Adani group chairman said.