Adani Group stocks fall 2-4% after Deloitte’s exit triggers a sell-off

MSKA & Associates Chartered Accountants has been appointed as the new auditor of Adani Ports and Special Economic Zone.

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The exit of Deloitte Haskins & Sells LLP as the statutory auditor for Adani Ports and Special Economic Zone triggered a sell-off across all group stocks on August 14.

All 10 Adani Group stocks traded down in early hours of August 14, with the flagship Adani Enterprises and Adani Ports being the worst hit among Nifty50 stocks on losing around 4 percent.

At 10.30am, shares of all 10 Adani-Group stocks were trading 2-4 percent lower on the National Stock Exchange.

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The Adani stocks came under pressure after the board of Adani Ports accepted the resignation of Deloitte Haskins & Sells LLP as the company’s auditor, replacing it with MSKA & Associates Chartered Accountants.

Deloitte was engaged with only one Adani-Group company, Adani Ports, and had qualified the firm’s FY23 accounts on related party transactions.

Also Read | Adani Ports names MSKA & Associates as new auditor, says Deloitte’s exit arguments not convincing

Even though MSKA & Associates is one of the top six global audit firms, brokerage firm CLSA pointed out repeated change in auditors seen by the Adani Group was the primary cause behind the fall in the stocks.

Jefferies too highlighted the fact that auditor resignations are largely viewed as a negative by the market, which explains why the news of Deloitte’s exit dented the sentiment. The firm also sees some comfort from the replacement with a reputed auditor.

Regardless, CLSA had hinted towards the possibility of a near-term correction in Adani Ports following the auditor’s resignation but still saw the stock as a good buy candidate.

Operationally, Jefferies also anticipates double-digit growth to continue for Adani Ports in the medium term. “Mundra’s market share gain story may be replicated at acquired ports,” Jefferies said in connection with the growth prospects for Adani Ports.

Also Read | Adani probe wraps up as India tightens disclosure for big firms

August 14 also marks the deadline for the Securities and Exchange Board of India (Sebi) to conclude its investigation into the Adani-Hindenburg issue. Following a request from markets watchdog, the Supreme Court had granted it an extension until today.

Although the case was originally scheduled for a hearing today, CNBC-TV18 reported citing legal sources indicates that the hearing is now expected to be scheduled for August 29.

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