Adani Group’s Troubles Mount as Hindenburg Report Leads to Share Losses

Adani Group V/s Hindenburg Research

A damning research report regarding the Adani Group, whose companies alone have lost more than Rs 4.17 lakh crore in market valuation, caused the stock market to crash on Friday. Forbes lists tycoon Gautam Adani as the seventh richest person in the world with a net worth of $96.6 billion, down from the third spot he had before the publication of the Hindenburg report. Shareholders lost approximately Rs 12 lakh crores in two days of widespread selling, which also affected banking stocks because the report by US short-seller Hindenburg Research gave the perception that Indian public sector banks were excessively exposed to the Adani Group.

The Sensex dropped 874 points and the Nifty fell below 17,600 points. The follow-on public offer (FPO) of Rs 20,000 crores by Adani Enterprises may be impacted by the Hindenburg report as well. Retail investors may be hesitant to subscribe to the FPO because the scrip is now trading at Rs 2,762, which is significantly below the FPO’s price range of Rs 3,112 – Rs 3,276. Questions have already been raised over LIC’s exposure to the Adani Group, which lost 23,000 crores rupees in two days, falling from 77,000 to 53,000 ending Friday.

Adani Group - Hindenburg

What Exactly is the Report & What Hindenburg Says?

Hindenburg Says: “India is developing into a worldwide superpower and is home to many of the most talented businesspeople, engineers, and technologists in the world. The capital markets’ dysfunction, however, has hampered the nation’s economic growth.

Journalists are increasingly being imprisoned or even killed for criticizing India’s wealthy businesspeople and leaders. Analysts on the stock market have been detained for publishing unfavorable articles about firms. Corporate wrongdoing has mainly gone unpunished in this environment of restrained discourse.

We examine what we consider to be one of history’s most heinous cases of corporate deception in this study.

We have discovered proof of decades-long, blatant accounting fraud, stock manipulation, and money laundering at Adani. Adani has accomplished this enormous task with the aid of government enablers and a cottage industry of foreign businesses that support these operations.

Multiple tiers of government are affected by these corruption problems. Numerous people, we spoke with claim that SEBI, the Indian securities regulator, is more likely to shield the offenders than to hold them accountable.

The greatest cure, in our opinion, is sunlight, and we hope that this study can shed some light on the matter. Furthering that objective, we hope Adani responds to the 88 queries we’ve included in this report’s conclusion.”

How Adani Responded?

According to a statement from Jatin Jalundhwala, the legal director of Adani Group, “We are assessing the appropriate remedies under the US and Indian legislation for corrective and punitive action against Hindenburg Research.”

The Adani Group and its leaders’ goodwill and reputation have been attacked, and the FPO (Follow-on Public Offering) from Adani Enterprises has been sabotaged, according to the firm, which described Hindenburg’s report as purposefully spiteful and unresearched.

“The report’s volatility in the Indian financial markets is of considerable worry and has caused undesired suffering for Indian residents,” the statement read.

According to the Ahmedabad-based conglomerate, Hindenburg Research is positioned to profit from a decline in Adani shares, hence the research and its unsupported claims were intended to hurt the share prices of Adani Group firms.

Jugeshinder Singh, the CFO of Adani Group, claimed on Wednesday that the date of the report’s publication was planned with the malicious goal to harm its FPO, which begins accepting public subscriptions tomorrow.

As he dropped to the fourth spot on the Bloomberg Billionaires Index ranking, Gautam Adani also lost his position as the third-richest person in the world. An estimate of his net worth puts it at $113 billion.

Hindenburg’s Response

“Hindenburg Research posted on Twitter, “In the 36 hours since we presented our research, Adani hasn’t addressed a single fundamental problem we identified. “At the end of our study, we posed 88 simple questions that, in our opinion, allow the corporation to be forthcoming. Adani has not yet provided any responses to any of these queries.”

Hindenburg declared that it “completely stands” by the study and that it thinks any legal action would be pointless.

If Adani is sincere, it ought to launch a lawsuit in the US, where we do business. In a legal discovery procedure, we have a lengthy list of materials we would need, “Adani has claimed in statements that its 106-page, 32,000-word report—which had over 720 citations and was written over two years—is unresearched.

Hindenburg announced on Wednesday that its two-year investigation found that Adani Group had “committed over a long period in a blatant stock manipulation and accounting fraud scheme.”

Bill Ackman, a billionaire investor and the CEO of Pershing Square Capital Management, expressed his support for the short-selling company in a tweet sent just before the opening of the Indian stock market.

He said that the Adani Group’s statement “speaks volumes,” and that he “considered the Hindenburg report quite believable and exceptionally well researched.”

He concluded, “Caveat emptor.”

Adani’s Latest Response

The claims made against its businesses by the New York-based Hindenburg Research in a study last week were compared by the Adani Group on Sunday to a “planned attack on India,” its institutions, and the “growth story” of India.

The Adani Group stated in a 413-page response to the 106-page Hindenburg Research report that it was guilty of “brazen stock manipulation and accounting fraud” that “This is not merely an unwarranted attack on any specific company but a calculated attack on India, the independence, integrity, and quality of Indian institutions, as well as the growth story and ambition of India.”

Hindenburg Responded in a tweet

The Dilemma Around Investors & Shareholders in Adani Group

Adani Enterprises’ shares, which are traded on the Mumbai Stock Exchange, decreased by more than 9% on Friday. Adani Green Energy lost 19.89%, Adani Transmission dropped 19.47%, and Adani Power dropped 5%. The share price of Adani Port fell 13.8% as well.

The actions come after the losses on Wednesday following the original publication of Hindenburg’s report. On Thursday, the Indian stock market was closed.

What Analysts Say?

The stocks of listed Adani Group firms have plunged as a result of the Hindenburg article, although experts do not foresee any significant effects. Numerous media have mentioned analysts who have questioned the timeliness of the research and claimed that its conclusions have been validated to this point.

Samrat Dasgupta, chief executive of Esquire Capital Investment Advisors, told Reuters that the Adani Enterprises FPO should “sail through effectively” and that he does not expect the Hindenburg report to have much of an impact.

Shares of Adani were “trading at ridiculous levels,” according to investment adviser Shashank Aggarwal of Addwise Capital. “There is no doubt that the report has caused a correction.”

After Hindenburg Research published a report stating that it was betting against shares in firms inside the Adani empire, investors started selling their shares. The seven major Adani listed firms, according to Hindenburg, have an “85 percent downside, just on a basic basis, because of sky-high valuations.”

According to Brian Freitas, a Periscope Analytics analyst based in New Zealand who has studied the Adani Group, “other than a shift in a mood where investors start doubting the accounting of every firm,” he does not yet see a risk of wider financial contagion.

Prices would drop even more if Adani’s lenders demanded additional security and the shares used to secure the loan were to be sold to meet those demands.

“The financial institutions themselves might be in danger if there is a dramatic decline in the stock price,” he warned.

Aggarwal pointed out that a significant chunk of the shares owned by the Adani family is open for trade, which might enhance price volatility.

He said that if the problems mentioned in Hindenburg’s report are real, they may have a larger effect. “The banking system is then impacted. The corporation is heavily indebted. They undoubtedly have a lot of bank borrowing.

Thursday’s trading was halted in India due to a holiday following Wednesday’s intense selling. On Friday, shares in the main business Adani Enterprises fell 18.3 percent as the bloodletting picked up speed. On Wednesday, its shares decreased by 1.6 percent.

Even greater losses were incurred by certain Adani enterprises.

Following a Wednesday decline of 8.1 percent, shares of Adani Transmission fell by 20 percent on Friday. Both Adani Green and Adani Total Gas had a 20% decline. The share price of Adani Ports and Special Economic Zone Ltd. fell by 15.2%.

What’s The Outcome?

The weekend, according to Brian Freitas, will allow investors time to assess the issue and Adani time to prepare a response to Hindenburg’s complaints.

When a short-seller issues such a thorough analysis and the corporation is unable to refute any of the claims, he added, “it’s not a great picture for corporate India.”

As a result, Freitas said, “it kind of raises questions about corporate governance in India as a whole and how the regulator comes into the picture.”


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The post’s objective is to provide information; it is not to support or disparage either side. Data and information displayed have been gathered from a variety of news and media websites and should be independently checked. The article is not meant to serve as investment or financial advice. Also, the article is not meant to serve as legal, tax, or other professional advice and is just meant to provide information.


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