Adani Group Shares were trading in the red zone on Wednesday following a report by Hindenburg Research that claimed that the Indian giant had participated in a clear stock manipulation and accounting fraud scheme over decades.
The short-seller said seven Adani listed companies have an 85% downside on a fundamental basis due to sky-high valuations and that “key listed Adani companies have also taken on substantial debt” which has “put the entire group on precarious financial footing”.
Reuters reported that earlier Adani Chief Financial Officer Jugeshinder Singh had on January 21 said that “Nobody has raised debt concerns to us. No single investor has.” Adani Enterprises, the flagship company of ports-to-energy conglomerate Adani Group, has said it will raise $2.5 billion in India’s largest follow-on public offering due this Friday.
The report has emerged at a time Adani Enterprises is looking to raise Rs 20,000 crore via a follow-on public offer.
Numerous people, including former Adani Group senior executives, were interviewed for the research, thousands of documents were examined, and due diligence site visits were made in close to a dozen different nations.
“Even if you ignore the findings of our investigation and take the financials of Adani Group at face value, its seven key listed companies have 85% downside purely on a fundamental basis owing to sky-high valuations,” said the forensic financial research company in its report.
The key listed Adani companies have also incurred significant debt, notably by pledging shares of their inflated stock as collateral for loans, placing the group’s overall financial situation in risk.
The Adani Group has reportedly been the subject of four significant government fraud investigations that have been estimated to have cost US$ 17 billion in total and have included allegations of money laundering, theft of tax dollars, and corruption.
“Adani family members allegedly cooperated to create offshore shell entities in tax-haven jurisdictions like Mauritius, the UAE, and Caribbean Islands, generating forged import/export documentation in an apparent effort to generate fake or illegitimate turnover and to siphon money from the listed companies,” said Hindenburg Research in its report.
Seven Adani group stocks namely Adani Total Gas, Adani Enterprises, Adani Transmission, Adani Green Energy, Adani Ports, Adani Power and Adani Wilmar together lost Rs 54,542 crore in market value following the report. Their combined m-cap stood at Rs 17.20 lakh crore compared with Rs 17.75 lakh crore a day ago.
Adani Ports lost 5.35 per cent to Rs 720 a piece, Adani Ports and Adani Wilmar lost over 4 per cent each. Adani Total Gas and Adani Transmission fell 3 per cent each. Adani Enterprises declined 2.5 per cent while Adani Green Energy was down 1.5 per cent. In m-cap terms, Adani Total Gas lost Rs 13,800 crore in market value, followed by Adani Transmission (down Rs 10,167 crore), Adani Enterprises (down Rs 9,604 crore), Adani Ports (down Rs 8,791 crore).
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