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Why Adani Group Stocks are Falling

Jul 15, 2022

Why Adani Group Stocks are Falling

The fastest growing stocks of 2022.

The best performing stocks since the March 2020 crash.

The most popular stocks in the stock market.

Many Adani group stocks feature in all the above categories.

All Adani group companies have witnessed a massive rally over the year gone by, making Gautam Adani the wealthiest man in India.

But lately, a couple of billionaire Gautam Adani's companies have been showing a sharp decline.

Yesterday, these companies fell nearly 8%. Today, they were down in the range of 5-6% but reversed course later in the day.

Is the market factoring the high valuations of these companies?

It could be.

In the past seven days, most of the Adani group stocks have gained considerably.

This is after the group forayed into the telecom business by participating in the 5G auctions.

Here's how the stocks of Adani Group has performed so far in July 2022

Adani Group share price Performance- 12 Days

Company Share Price (Rs) Change (%)
Adani Enterprises 2352.5 5
Adani Green Energy 2105.6 7.4
Adani Power 286.6 8
Adani Port and SEZ 726.9 7
Adani Total Gas 2671.9 11
Adani Wilmar 643.5 10
Source: Equitymaster

Investors may have booked profits after a sudden rally seen in the past couple of days.

Adani groups stocks have been buzzing in the market for their high PE multiples. Take the top 5 most overvalued stocks in India and a couple of them will be from the Adani group for sure.

The recent correction can be due to the absurd valuations of the Adani group companies.

Stocks of all the companies have shown a bullish trend despite market volatility.

This year too, Adani Power and Adani Wilmar have turned into multibagger stocks and delivered over 100% returns.

Value investors usually refrain from trading the shares of such companies. The overvalued stock price makes the company is prone to market risk arising from poor management.

Here's the PE multiple for Adani group companies.

Adani Group Trailing Twelve Month PE

Company PE Multiple
Adani Enterprises 565
Adani Green Energy 639
Adani Port and SEZ 32.8
Adani Power 21.9
Adani Total Gas 577.2
Adani Wilmar 96.7
Source: Equitymaster


Some of the Adani group stocks in over a year have given multibagger returns. All these stocks have given a consistent rising performance.

This sudden dip in their stock price can be a temporary effect. No one knows for sure...

Also, some of the stocks from the group saw a downfall due to the recent volatility caused by the changes in the MSCI index.

The only red flag that can be presently spotted for the investment is the overvaluation of stocks.

If you are an investor in any Adani group company and facing a dilemma of holding or selling, check out Co-head of Research at Equitymaster Rahul Shah's video where he explains what to do with Adani group stocks.

While many of you may have added to your riches by investing in these companies, Co-head of Research at Equitymaster, Rahul Shah, is happy to have missed this opportunity.

Surprising, isn't it?

According to Rahul, the hype in the companies is not justified. Read his editorial to know why - Why I Haven't Recommended Any Adani Group Stock Yet.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...

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