A report published by American financial research firm Hindenburg Research has put Gautam Adani-led Adani Group has resulted in a huge fall in the stocks of Adani Group and caused a loss of nearly 97000 crore.
The report, which alleges that the conglomerate is involved in a ‘brazen stock manipulation and accounting fraud scheme’, has resulted in huge losses in market capitalization for several Adani Group companies on the stock market.
The group, which is controlled by world’s third richest man Gautam Adani has long faced concerns about elevated debt and the Hindenburg report comes at a time when Adani Enterprises plans to raise $2.5 billion in India’s largest follow-on public offering this week.
Shares of Adani Enterprises declined 1.54 per cent to Rs 3,389.85 on January 25. Adani Green Energy, Adani Ports and Special Economic Zone, Adani Power, Adani Total Gas, Adani Transmission and Adani Wilmar also slipped anywhere between 5 per cent and 9 per cent. Adani’s recent acquisitions namely ACC, Ambuja Cements and NDTV also declined 7.26 per cent, 7.71 per cent and 4.98 per cent, respectively.
Since Hindenburg’s report had an immediate impact on Adani stocks, and Adani Group released a quick statement refuting the report, the American research firm is clearly at loggerheads with India’s richest man’s enterprise. The Hindenburg Research report claimed that key listed Adani companies have taken on substantial debt, including pledging shares of their inflated stock for loans, putting the entire group on precarious financial footing.
Hindenburg’s report said that five of seven key listed Adani companies have reported current ratios – a measure of liquid assets minus near-term liabilities – below 1. This, the short-seller said, suggested “a heightened short-term liquidity risk”. Hindenburg is known for shorting electric truck maker Nikola Corp and Twitter though it later reversed its position in Twitter.
As Adani Enterprises gears up for its upcoming FPO, which is India’s largest FPO till date, it is evident that the Hindenburg report has dampened the excitement for Adani stocks in the market. Adani Enterprises’ Rs 20,000-crore FPO will open for subscription on January 27.