Mutual Funds Slash Exposure to Adani Group; Rs 1,160 Crore Worth of Shares Dumped in April

Large-Scale Divestments Across Seven Listed Adani Firms Signal Growing Institutional Caution Amid Valuation and Governance Concerns

Indian mutual funds significantly pared down their exposure to Adani Group companies in April, selling shares worth over Rs 1,160 crore across eight listed entities. The latest data shows a sustained pattern of disengagement, as mutual funds pulled out of seven Adani companies in April, up from four in March, indicating a growing institutional unease surrounding the conglomerate’s stock valuations, governance challenges, and regulatory scrutiny.

The most substantial selloff was witnessed in Adani Enterprises, where mutual funds trimmed holdings by Rs 346 crore. This was followed by Adani Energy Solutions and Ambuja Cements, with divestments of Rs 302 crore and Rs 241 crore, respectively. Other notable exits included ACC (Rs 124 crore), Adani Ports & SEZ (Rs 7.7 crore), and Adani Total Gas (Rs 3.43 crore). The only outlier was Adani Power, where funds marginally increased exposure by Rs 102 crore, suggesting selective optimism based on thermal energy tailwinds or valuation comfort.

Highlights:

• Rs 1,160 crore worth of Adani shares offloaded in April, spanning seven of eight listed group firms.

• Adani Enterprises (-Rs 346 crore), Adani Energy Solutions (-Rs 302 crore), Ambuja Cements (-Rs 241 crore) led the selling spree.

• Adani Power (+Rs 102 crore) was the only group stock that saw net buying by mutual funds.

• Mutual fund divestment spread widened from four Adani stocks in March to seven in April.

Cautious Disengagement Trend Strengthens Over Three Months as Mutual Funds Reallocate Capital Amid Risk Aversion

The April selloff builds upon a broader trend of mutual fund disengagement from Adani stocks that began in early 2024. In February, mutual funds had divested Rs 321 crore across Adani entities, a trend that only intensified in March and April. Back in January, net purchases across Adani stocks amounted to only Rs 480 crore, reflecting subdued institutional enthusiasm even at the start of the calendar year.

According to fund managers and analysts, the reallocation away from Adani Group companies stems from a mix of corporate governance apprehensions, high price-to-earnings (P/E) ratios, sectoral concentration risks, and lingering fallout from past controversies. Many mutual fund houses, particularly those with conservative mandates or ESG-screening mechanisms, continue to classify the group’s entities as high-risk due to historic volatility and opaque financial disclosures.

Highlights:

• Mutual fund outflows from Adani stocks started in January, escalated to Rs 321 crore in February, and peaked at Rs 1,160 crore in April.

• Shift indicates growing risk aversion among domestic institutional investors, especially those with conservative mandates.

• Governance, valuation, and sectoral risk factors cited as key triggers for sustained selloff.

Valuation Premiums and Earnings Visibility Disparity Drive Strategic Mutual Fund Exit

In the current macro environment marked by selective risk-taking and focus on earnings visibility, many Adani Group companies are being penalized for elevated valuation multiples that are deemed unsustainable. Analysts note that several Adani firms trade at multiples significantly higher than sectoral peers, raising concerns over downside protection in the event of earnings disappointment or regulatory intervention.

With growth-oriented funds preferring undervalued or steady-compounder stocks, Adani entities are struggling to meet institutional risk-reward thresholds. Additionally, mutual funds appear to be rotating capital into sectors with stronger visibility, such as capital goods, auto, banking, and consumption, while avoiding sectors exposed to commodity, infra-financing, and environmental volatility.

Highlights:

• Elevated valuations across Adani Group stocks seen as a major deterrent for mutual fund managers.

• Preference shifting toward reasonable valuations and consistent earnings, especially in a challenging macro setup.

• Sectoral reallocation evident as funds move toward defensives and growth stories with clearer fundamentals.

MFs Pare Stake in Most Adani Group Firms in April

Source: ACE Equities, moneycontrol

Adani’s Legal Troubles in the US Add to Investor Skepticism; Meetings Held with Trump Administration for Case Resolution

Adding another layer of complexity to the group’s institutional perception, a Bloomberg News report revealed that Gautam Adani’s representatives have initiated talks with officials from the Donald Trump-led US administration. The discussions reportedly aim to seek dismissal of criminal charges linked to an overseas bribery investigation, which has weighed on investor sentiment and international credibility.

According to the report, these meetings began earlier in 2025 and have intensified recently, with Adani’s legal team arguing that the case conflicts with current US policy priorities. A resolution may be reached within a month, depending on how negotiations progress. While such diplomatic and legal overtures are not uncommon for global conglomerates, the report has amplified concerns among Indian institutional investors already wary of reputational risks surrounding the group.

Highlights:

• Adani Group engaged in legal talks with the US Trump administration to drop overseas bribery charges.

• Discussions have accelerated in recent weeks; a resolution is reportedly possible within a month.

• Ongoing legal scrutiny seen as an additional risk flag by Indian mutual fund managers, adding to the sentiment-driven exit.