Morgan Stanley flags Adani over governance and valuation metrics

Environmental and Social Governance ratings have an impact on a firm's market reputation, which is something the Adani Group has been scrambling to salvage since the Hindenburg report went public. Despite a green run for its stocks following a Rs 15,000 crore stake sale, Adani's stocks once again plunged by as much as 11 per cent in two days. As Adani's valuation remains Rs 10 lakh crore behind its January 23 level, Morgan Stanley Capital International (MSCI) ha cut its ESG ratings as well.

Why has Adani raised eyebrows

MSCI has flagged risks at the crisis-hit conglomerate, after a downgrade by CARE Ratings pushed four Adani stocks into red territory. Earlier this month, the finance firm had changed risks from probes triggered by the Hindenburg report from minor to moderate. Now it has flagged Adani Group firms over accounting investigations and valuation metrics.

Repeated blows to Adani's reputation

The concerns included board independence, governance and controlling shareholders, while bribery and fraud were also added to controversies posing risks to Adani's reputation. The move by MSCI comes after Sustainalytics had downgraded Adani's ESG ratings early in February. MSCI had also stripped some of the group's firms of their free float status, hampering its reach among investors.