- Adani Enterprises fell 10% in a single session, triggering a lower‑circuit break.
- Revenue grew YoY, but profit volatility and aggressive corporate actions raise red flags.
- Sector peers like Tata Power and Reliance are repositioning, potentially draining capital from Adani.
- Technical indicators suggest a bearish momentum, yet a short‑term bounce is possible.
- Investors need a clear bull‑bear playbook to protect portfolios amid heightened Nifty 50 exposure.
You missed the warning signs, and Adani Enterprises just hit the lower circuit.
Adani Enterprises' 10% Drop: Immediate Implications
The stock closed at Rs 1,877.80, a full 10% slide that forced a lower‑circuit halt. While the headline‑grabbing decline captures attention, the underlying numbers tell a more nuanced story. The company posted a consolidated revenue of Rs 97,894.75 crore for FY 2025, up modestly from Rs 96,420.98 crore a year earlier. Net profit, however, surged to Rs 7,510.22 crore from Rs 3,293.40 crore, more than doubling year‑on‑year. On the surface, the earnings explosion looks bullish, but the market reaction suggests investors are pricing in factors beyond the top line.
Why the Revenue Surge Isn't Protecting the Stock
Revenue growth of 1.5% is barely above inflation and well below the double‑digit expansion many Indian conglomerates have managed in the past five years. More concerning is the volatility in quarterly earnings. The September‑2025 quarter reported a net profit of Rs 3,396.56 crore, a 71% jump from the previous quarter, yet the December‑2025 quarter swung to a loss of Rs 16.54 crore. Such swings erode confidence, especially when the broader market is seeking stability in Nifty 50 constituents.
How Sector Trends Amplify the Risk for Nifty 50 Heavyweights
The infrastructure and energy segments, where Adani has deep exposure, are currently grappling with tighter credit conditions and heightened regulatory scrutiny. The Indian government’s push for renewable transition is reshaping capital allocation, favouring firms with clear green pipelines. Competitors that have already locked in long‑term PPAs (Power Purchase Agreements) are seeing steadier cash flows, while Adani’s diversified portfolio is still heavily weighted toward capital‑intensive projects that may face delays.
Competitor Movements: Tata Power and Reliance's Counter‑Strategies
Tata Power announced a 15% increase in its renewable capacity forecast for FY 2026, backed by a new equity raise at a premium to market price. Reliance, meanwhile, accelerated its solar‑to‑hydrogen roadmap, attracting strategic investors and lowering its cost of capital. Both firms have kept their share prices above the 50‑day moving average, signalling market confidence. In contrast, Adani’s recent rights issue—offering 3 new shares for every 25 existing at a Rs 1,799 premium—has been perceived as a cash‑drain rather than a growth catalyst.
Historical Parallel: 2020 Share‑Split Fallout
Adani’s 2004 stock split from Rs 10 to Rs 1 face value was initially hailed as a liquidity booster. However, the subsequent years saw a series of bonus issues and rights offerings that diluted shareholder value and created volatility spikes. Analysts who flagged the risk back then warned that excessive equity‑raising could mask underlying operational weakness—a pattern that appears to be resurfacing.
Technical Signals: What the Charts Reveal
On the daily chart, the stock breached its 20‑day simple moving average (SMA) and is now testing the 50‑day SMA, a classic bearish crossover. The Relative Strength Index (RSI) has dipped below 30, indicating oversold conditions but also highlighting momentum exhaustion. Volume surged 3.2× the average on the day of the circuit breaker, confirming strong selling pressure. Traders should watch for a potential bounce if the price finds support around the Rs 1,750 level, but a break below Rs 1,700 could open the floodgates for further declines.
Investor Playbook: Bull vs Bear Cases
Bull Case: If Adani can convert its profit surge into sustainable cash flow—particularly through its renewable ventures—valuation could normalize at a forward PE of 12‑15x, implying a price target of Rs 2,250. A successful rights issue that funds low‑cost green assets could also reignite investor confidence.
Bear Case: Continued earnings volatility, high debt ratios, and aggressive equity dilution may push the stock into a prolonged downtrend. A breach of the Rs 1,700 support could trigger stop‑loss cascades, potentially driving the price toward the Rs 1,500‑1,600 range. In the worst‑case scenario, the stock could lose its Nifty 50 weightage, prompting index funds to unload shares en masse.
Bottom line: The 10% plunge is more than a market dip—it’s a warning bell for anyone holding Adani Enterprises in a risk‑adjusted portfolio. Stay vigilant, monitor the upcoming board meeting on February 3 2026 for any earnings revisions, and calibrate your exposure based on the evolving risk‑reward landscape.