Adani Group terms Hindenburg report 'malicious' after stocks crash

After a report alleged that the Adani Group was engaged in “brazen stock manipulation” and “accounting fraud scheme” over decades, the shares of the group’s companies fell by 10% on Wednesday (January 25).

Adani Group listed entries have seen a 10% drop in share price following the publication of an investigative report by US short-seller Hindenburg, thereby eroding founder and chairman of the Adani Group, Gautam Adani’s personal wealth by around $6 billion.

Also read: Gautam Adani: Terror attack survivor, Asia’s richest man, is now on to a mega FPO

Adani Enterprises fell about 3%, while Adani Ports and Special Economic Zone sank more than 6%. Both were among the top three losers on the benchmark Nifty index. Adani-owned cement firms ACC and Ambuja Cements fell 6.2% and 6.9%, respectively, according to a Reuters report earlier on Wednesday.

Hindenburg has revealed the findings of its two-year investigation into alleged fraud by the Adani Group.

“Today we reveal the findings of our 2-year investigation, presenting evidence that the INR 17.8 trillion (U.S. $218 billion) Indian conglomerate Adani Group has engaged in a brazen stock manipulation and accounting fraud scheme over the course of decades,” the report said.

Also read: Gautam Adani’s success secret: ‘It’s hard work, not Modi connection’

It claimed that its research involved speaking with dozens of individuals, including former senior executives of the Adani Group, reviewing thousands of documents, and conducting diligence site visits in almost half a dozen countries.

“Even if you ignore the findings of our investigation and take the financials of Adani Group at face value, its 7 key listed companies have 85% downside purely on a fundamental basis owing to sky-high valuations,” it stated.

Also read: Adani Group’s gross debt increases 42% to ₹2.22 lakh crore: Report

As per the report, Gautam Adani has amassed a net worth of roughly $120 billion, adding over $100 billion in the past three years largely through stock price appreciation in the group’s 7 key listed companies, which have spiked an average of 819% in that period.

Key listed Adani companies have also taken on substantial debt, including pledging shares of their inflated stock for loans, putting the entire group on precarious financial footing. 5 of 7 key listed companies have reported ‘current ratios’ below 1, indicating near-term liquidity pressure, it said.

Also read: Gautam Adani among 3 Indian billionaires on Forbes Asia’s ‘Heroes of Philanthropy’ list

Adani Group’s reaction

In a statement, the Adani Group questioned the timing of the Hindenburg report and called it “malicious” and an attempt to “undermine” the group’s reputation.

“We are shocked that Hindenburg Research has published a report on 24 January 2023 without making any attempt to contact us or verify the factual matrix. The report is a malicious combination of selective misinformation and stale, baseless and discredited allegations that have been tested and rejected by India’s highest courts. The timing of the report’s publication clearly betrays a brazen, mala fide intention to undermine the Adani Group’s reputation with the principal objective of damaging the upcoming Follow-on Public Offering from Adani Enterprises, the biggest FPO ever in India,” Jugeshinder Singh, Group CFO, Adani, said in the statement.