Adani Power, Adani Enterprises, Adani Green, Adani Energy: Adani stocks fall up to 17% after Hindenburg Research report; what's next?

Adani Enterprises Ltd, Adani Power Ltd, Adani Total Gas Ltd, Adani Energy Solutions Ltd, Adani Green Energy Ltd and five other Adani group stocks fell up to 17 per cent in Monday's trade after Hindenburg Research suggested alleged links of SEBI Chairperson Madhabi Puri Buch and her husband Dhaval Buch with an offshore fund tied to the Adani group. While the Adani group, the market regulator SEBI and the Buchs issued clarifications, Adani stocks fell on knee-jerk reaction to fresh Hindenburg allegations.

Analysts believe the prevailing weakness in Adani stocks would be short-lived. Shares of Adani Power plunged 10.94 per cent to hit a low of Rs 619 on BSE. Shares of the flagship firm Adani Enterprises tanked 5.27 per cent to hit a low of Rs 3,018.55. Adani Energy Solutions in fact nosedived 17.06 per cent to hit a low of Rs 915.70, before staging recovery. The stock was later down 2.38 per cent at Rs 1,078. Adani Green Energy sank 6.96 per cent to Rs 1,656.05.

Adani Total Gas tumbled 13.39 per cent to Rs 753. It later recovered to Rs 829.85 level, down 4.55 per cent. Adani Wilmar declined 6.49 per cent to Rs 360. Adani Ports dropped 4.95 per cent to Rs 1,457.35. ACC, Ambuja Cements and NDTV slipped 2-3 per cent.

Hindenburg claimed that the IPE Plus Fund where SEBI chief had investments, beyond being a purported channel for Vinod Adani’s money, had other close ties to the Adani group. The Founder and Chief Investment Officer (CIO) of the IPE Plus Fund was Anil Ahuja, who, according to his biography and exchange disclosures, served as a director of Adani Enterprises for three terms spanning nine years, ending in June 2017, Hindenburg said. He had previously been a director of Adani Power, it claimed.

In response to these claims, the Adani Group emphasised that Anil Ahuja, mentioned in the report, served as a nominee director of 3i investment fund in Adani Power from 2007 to 2008 and later as a director of Adani Enterprises until 2017. However, the Adani Group clarified that it has no commercial relationship with the individuals or matters mentioned in what they describe as a deliberate attempt to tarnish its reputation.

Besides, the SEBI chief said the decision to invest in the fund was based on the fact that the Chief Investment Officer, Anil Ahuja, was a longtime friend of Dhaval’s from school and IIT Delhi. Ahuja, who had a strong investing career with experience at Citibank, J.P. Morgan, and 3i Group plc, was the key factor in their investment decision. “When in 2018 Mr. Ahuja left his position as CIO of the fund, we redeemed the investment in that fund,” the release stated. They also confirmed, with Ahuja’s affirmation, that at no point did the fund invest in any bonds, equities, or derivatives of any Adani group company.

Vinit Bolinjkar of Ventura Securities does not see Hindenburg allegations as serious. "They are recycling of the same thing. They are trying to connect one event around and into the other, without giving any evidence of criminality. It is old wine in a new bottle, recycled and desperate."

Bolinjkar said though the report could have some impact on Adani stocks and the market in the short term, they should recover soon. Bathini said any steep fall in Adani group stocks could be a buying opportunity.

Stock prices are slaves to earnings, said Kranthi Bathini, Director of Equity Strategy at WealthMills Securities.

Bathini noted that he would be more concerned if the Hindenburg report raised issues that could impact the Adani group’s earnings. He remarked that aside from the allegations concerning the SEBI Chair, "Most of the claims in the report are already known to the market. Such reports have circulated for some time. Except for a potential knee-jerk reaction lasting a day or two, I doubt the fresh report will significantly harm the Adani group’s earnings potential in the medium to long term."