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Adani Group shares tumble as short seller Hindenburg alleges fraud

Stock Markets Jan 24, 2023 11:38PM ET
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By Ambar Warrick 

Investing.com -- Shares of the seven publicly listed firms under the Adani Group tumbled on Wednesday after short seller Hindenburg Research said it had taken positions against the firms, alleging that the company had likely engaged in fraud, and that it was significantly overvalued. 

Adani Enterprises Ltd (NS:ADEL), Adani Total Gas Ltd (NS:ADAG), and Adani Green Energy Ltd (NS:ADNA) fell between 1.9% and 3%, while Adani Wilmar Ltd (NS:ADAW), Adani Power Ltd (NS:ADAN), and Adani Transmission Ltd (NS:ADAI) fell between 3% and 4%. 

Adani Ports and Special Economic Zone Ltd (NS:APSE) was the worst performer in the lot, down nearly 5% in early trade.

Hindenburg said in a report that it had taken a short position in the group through its U.S.-traded bonds and Indian-listed derivatives. 

The short seller said that it sees an 85% downside from current valuations for the seven firms, based solely on their fundamentals. Hindenburg said that multiple firms under Adani were highly leveraged in comparison to their peers, and that the situation was worsening due to negative free cash flows.

The short seller also alleged that the firm “engaged in a brazen stock manipulation and accounting fraud scheme” in pushing up its valuations, and also accused the firm of engaging in money laundering.

Hindenburg is a U.S.-based activist short seller that had famously alleged foul play and taken positions in Clover Health (NASDAQ:CLOV) and Nikola (NASDAQ:NKLA), the latter of which attracted a high-profile inquiry by the U.S. Securities and Exchange Commission.

Concerns over Adani’s debt position came to the fore in 2022 after the release of a CreditSights report that described the group as largely overleveraged - an allegation that the firm has repeatedly denied. According to CreditSights, which is part of the Fitch Group, Adani Group’s total gross debt in the financial year to March 31, 2022, jumped 40% to INR2.2 trillion ($1 = INR81.553). 

The Adani Group is India’s second-largest conglomerate, and saw its share valuations skyrocket over the past few years, valuing the firm at about $218 billion. This made its founder and Chairman, Gautam Adani, the third-richest man in the world, with a personal valuation of $120B. 

Losses in the Adani firms appeared to have spilled over into broader Indian markets on Wednesday, with the Nifty 50 and BSE Sensex 30 indexes falling 0.7% and 0.5%, respectively.

 
 
 
 
 
Adani Group shares tumble as short seller Hindenburg alleges fraud
 

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Comments (4)
Lalit Mohan Pandey
Lalit Mohan Pandey Jan 25, 2023 8:27AM ET
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Hindenburg Research by Anwesha Madhukalya on Adani Green is a complete misguidance and concocted for the purpose of benefitting by short selling. Hindenburg main business is short selling. It should be investigated if Hindenburg has done such type of fraudulent and fake reporting on other companies also for the purpose of earning by short selling. Had his report on Adani Green been authentic then Hindenburg and Anwesha Madhukalya may have submitted the report to SEBI, Central Government and RBI. So Hindenburg's such fake reporting may damage the prestige of Investing.com, hence Hindenburg should be restricted from reporting in Investing.com plateform.
HD HD
HD HD Jan 25, 2023 8:27AM ET
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Everyone in india knows Adani group is currupt, everyone in india knows indias politicians are currupt.  I'm glad someone outside of india is reporting this so Adani's goons can't get them.
Lalit Mohan Pandey
Lalit Mohan Pandey Jan 25, 2023 2:17AM ET
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Some William Smith's statement about Hindenburg:-Hindenburg. Destroying everything it touches with their planned attacks whenever and wherever they think they can promote chaos.
Harris Grey
Greybeard Jan 25, 2023 2:00AM ET
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Adani Group is significantly overvalued.
Lalit Mohan Pandey
Lalit Mohan Pandey Jan 25, 2023 2:00AM ET
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But value of assets with Adani group companies justifies the valuation, share prices of Adani Green Energy are undervaued to the extent of 85% keeping in view the value of assets lying with Adani Green Energy.
Lalit Mohan Pandey
Lalit Mohan Pandey Jan 25, 2023 1:47AM ET
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Hindenburg research is a fraudster.
Ajay Nimmagadda
Ajay Nimmagadda Jan 25, 2023 1:47AM ET
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Adani is a fraudster, are you not seeing how he is gobbling up countries assets with political help?
 
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