Shares of AirAsia Group Bhd tumbled on Wednesday after India federal police filed a case against the airline that analysts said could defer IPO plans and international expansion for its Indian arm.

The case, also filed against CEO Tony Fernandes and its domestic entity AirAsia India, concerns allegations of corruption and breaking rules in obtaining a flying licence - accusations that the unit has refuted.

Shares slid six percent to a six-month low to give the airline a market value of roughly US$2.6 billion. Malaysia's broader market was down 2.4 percent.

"The investigations could be long-drawn and will de-rail AirAsia India's plans to launch international flights from next year and defer its IPO targets too," said Corrine Png, CEO of Singapore-based transport research firm Crucial Perspective.

AirAsia said in January it was considering an IPO of the Indian operation, which had 14 planes at end-2017, with plans to expand its fleet to 60 over the next five years.

Under Indian rules, it can launch international flights once it has 20 planes.

Png said AirAsia India's expansion had been too aggressive, resulting in losses doubling in the quarter ended March 31.

"This raises the possibility that AirAsia Group will need to inject more capital into AirAsia India, which may not sit well with AirAsia Group's investors," she said.

AirAsia India said in a statement on Tuesday it refuted any allegations of wrongdoing and was co-operating with all regulators and agencies "to present the correct facts".

AirAsia on Wednesday referred requests for comment to AirAsia India. Fernandes did not respond to requests for comment.

Fernandes is also under investigation in Malaysia in a dispute with the country's regulator, the Malaysian Aviation Committee, over the cancellation of 120 flights during the general election period earlier in May.

- Reuters