Shares of listed companies linked to India’s sprawling Adani group tumbled $7.7 billion
Shares of seven listed companies in Adani Group fell an average of about 4 percent late in the morning in Mumbai, while flagship Adani Enterprises fell 3.7 percent. These declines brought the combined loss in market capitalization for Adani Group shares to around Rs 625 billion (US$7.7 billion).
Adani’s business is expanding rapidly. The self-made tycoon started out as a commodities trader in the 1980s before eventually building India’s largest private infrastructure conglomerate with around a dozen ports and eight airports. The group has several subsidiaries spanning sectors such as data and defense.
The report comes as Adani, who has a net worth of around $118 billion, according to Bloomberg.
Jugeshinder Singh, Adani Group’s chief financial officer, said the conglomerate was “shocked” by the Hindenburg report, describing it as “a malicious combination of selective misinformation and outdated, unsubstantiated and discredited allegations”.
Singh said the timing of the report, which comes days ahead of a follow-up bid by Adani Enterprises, was aimed at “undermining the Adani Group’s reputation” and damaging demand for the upcoming bid. He added that the group “always obeyed all laws.”
The Hindenburg report, released Wednesday morning ahead of the Mumbai market, claims that “even if you ignore the findings of our investigation . . .[Adani Group’s]major publicly traded companies have 85 percent downside purely on a fundamental basis due to sky-high valuations.”
Hindenburg said it took a short position on Adani Group companies “through US-traded bonds and non-India-traded derivative instruments.”
The billionaire businessman has claimed his companies’ valuations are justified.
Adani last year announced plans to increase the number of freely traded shares in Adani Enterprises after the company’s share price rose more than 3,300 percent in three years. The public tender for a share offering by Adani Enterprises, which aims to raise up to Rs 200 crore, is expected to start on Friday.
The holdings of several Mauritius-based mutual funds, which have held shares in Adani Enterprises and other listed companies in the Adani Group for years, have come under scrutiny by Indian regulators in the past.
Analysts have raised concerns about Adani Group’s debt-driven growth, noting that the conglomerate’s total debt of nearly Rs2 trillion (about US$24 billion) is nearly seven times its pre-adjusted earnings.
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In December, the billionaire businessman told the Financial Times that some analysts “didn’t get it [his businesses] real”.
“Who understands are my lenders, my banks, my global investors. Every time Adani enters the market, they are happy to invest. And so we continue to grow,” he said.
The Adani Group, which derives much of its revenue from coal mining and burning, has vowed to become one of the world’s largest green energy companies by investing $70 billion in everything green by 2030 hydrogen to the production of solar modules.
Adani launched a hostile takeover of Indian broadcaster NDTV last year to build a media business.
Additional reporting by Benjamin Parkin, South Asia Correspondent