Shares of Adani Group tumbled for the second consecutive day after the Parliament was told that the Directorate of Revenue Intelligence and SEBI (Securities and Exchange Board of India) were probing some entities of the Adani group about compliance with SEBI regulations.
Minister of State (MoS) for finance Pankaj Chaudhary, in reply to a question by Trinamool Congress MP Mahua Moitra, said in Parliament that SEBI was investigating Adani Group companies for non-compliance with rules.
Adani Enterprises' share declined 3 per cent to hit an intraday low of Rs 1338.80 against the previous close of Rs 1380.55 on BSE. Market cap of the firm fell to Rs 1,50,234.06 crore. Share of Adani Ports was down 2.6 per cent to hit an intraday low of Rs 656.30. Market cap of the firm fell to Rs 1,37,338.43 crore.
The other listed companies of the Group, Adani Green Energy, Adani Total Gas, Adani Power, and Adani Transmission hit lower circuits at 5 per cent with only sellers on the counters.
According to MarketsMojo, Adani Enterprises, the flagship company of Adani group has weak long-term fundamental strength with an average Return on Capital Employed (ROCE) of 6.08%. It also noted that the valuation is very expensive right now. For Adani Ports, the technical trend has deteriorated from Bullish on June 14, 2021, and the stock is technically in a Mildly Bullish range right now.
Refusing to provide details about proceedings by the Income Tax department, MoS finance Pankaj Choudhary said as far as an investigation under Income Tax Act, 1961, is concerned, the disclosure of information regarding specific taxpayers is prohibited, except as provided under Section 138 of Act.
The minister said Adani's six companies are listed and traded on recognised stock exchanges in India. The holding of FPIs in these companies is based on day to day trading of shares and thus dynamic, he added.
The minister said the enforcement directorate is not probing these companies holding FPIs (foreign portfolio investment) based on day to day trading of shares. Adani Group has six listed companies, including Adani Enterprises, Adani Transmission, Adani Total Gas, Adani Green, Adani Ports and Adani Power.
Responding to reports, the Adani group said the company has always been transparent with all its regulators and has full faith in them. "While we have always been fully compliant with applicable SEBI regulations, we have made full disclosure to SEBI on specific information requests from them in the past. However, we have not received any communication or information requests recently," it added.
"With regard to DRI matter, it issued a show-cause notice to Adani Power, about 5 years back. Subsequently, DRI passed an order in favour of Adani Power confirming that there is no over-valuation of equipment. The department has approached the Tribunal and the matter stands sub judice now. Adani Group is a responsible corporate citizen and strongly believes in compliance of applicable laws and adheres to prudent corporate governance framework," an Adani group spokesperson said.
This is not the first time Adani Group stocks are in focus. Last month, Adani group companies were caught up in controversies after reports emerged of the National Securities Depository Ltd (NSDL) freezing accounts of three foreign funds -- Albula Investment Fund, Cresta Fund, and APMS Investment Fund -- holding shares in Adani Group companies. The Adani group had later termed these reports "blatantly erroneous".
The Economic Times had reported the NSDL had frozen the accounts of three foreign funds due to insufficient disclosure on beneficial ownership. The report has been the subject of discussion and it hampered the continuous rally as well.
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