Shares of seven Adani group firms lost Rs 55,000 crore in market capitalisation (m-cap) in Wednesday's trade amid a report by short-seller Hindenburg suggesting Adani group listed companies have an 85 per cent downside potential on a fundamental basis due to sky-high valuations. The Hindenburg report also claimed that the Adani Group is engaged in “accounting fraud, stock manipulation and money laundering” over the course of decades.
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 group, however, refuted the allegations and raised questions over the timing of the report’s publication.
The report, the Adani group claimed, had mala fide intention to undermine the group’s reputation with the principal objective of damaging the upcoming follow-on public offering from Adani Enterprises, the biggest FPO ever in India.
"The investor community has always reposed faith in the Adani Group on the basis of detailed analysis and reports prepared by financial experts and leading national and international credit rating agencies. Our informed and knowledgeable investors are not influenced by one-sided, motivated and unsubstantiated reports with vested interests," Jugeshinder Singh, Group CFO, Adani Group said.
During intraday deals, Adani Ports lost 5.35 per cent to Rs 720 a piece; Adani Ports and Adani Wilmar fell over 4 per cent each. Adani Total Gas and Adani Transmission declined 3 per cent each. Adani Enterprises slipped 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).
Hindenburg Research said it holds short positions in Adani group companies through and non-Indian-traded derivative instruments and US-traded bonds. Hindenburg Research said 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"
A Reuters report earlier quoted Singh as saying: "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.
Ahead of the FPO, Gautam Adani, Adani Group Chairman, said the company's strongest growth is still ahead. He said the mega FPO is part of a 10-year capital planning cycle supported by a de-risk growth plan that is aligned with India's growth story and aligned with the group's capabilities.
In a video message as part of the FPO road show, Adani said India is on its way to become a $30-trillion economy by 2050 and that his businesses are aligned with India's ambitions of transitioning to ‘Bharat par Nirbhar’ (world dependent on India) from ‘Atmanirbhar Bharat’ (self-reliant India).
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