Shares of Adani Group companies were facing heavy selling pressure for second straight session on Friday and fell upto 20 per cent after Hindenburg Research alleged fraud by Adani Group.
Shares of Adani Ports and SEZ fell as much as 15 per cent, flagship Adani Enterprises dropped 10 per cent, Adani Power and Adani Wilmar were locked in 5 per cent lower circuit and Adani Total Gas and Adani Transmission were locked in 20 per cent lower circuit.
The Hindenburg Research report that caused this fall in Adani share prices was prepared after two years of research and investigation by this forensic financial research firm. In an official tweet, Hindenburg Research wrote, “Today we reveal the findings of our 2-year investigation, presenting evidence that the INR 17.8 trillion (U.S. $218 billion) Indian conglomerate Adani Group has engaged in a brazen stock manipulation and accounting fraud scheme over the course of decades.”
The research alleges that Gautam Adani, the founder and Chairman of the Adani Group has managed to amass a net worth of nearly $120 billion, largely through stock price appreciation over the last three years. It also alleged that the group’s six key listed companies have spiked at an average of 819 per cent over the entire period.
The news of Adani Group’s shares crashing comes at a time when Adani Enterprises’ Rs 20,000 crore follow-on-public offer (FPO) opened for subscription today.
Adani Enterprises shares dropped below its FPO price band of Rs 3,112 to 3,276 per share igniting fears that the FPO might not go through, analysts said.
Ahead of the FPO, the company raised close to Rs 6,000 crore from anchor investors.
Around 1.82 crore shares of the company were allocated to 11 institutional investors at Rs 3,276 per share, according to an Economic Times report. India’s biggest ever FPO will open to retail investors on Friday for a price band of Rs 3,112-3,276 per share.
Meanwhile, Adani Group has said it is examining legal options to take "punitive action" against the US activist investor for its "reckless" attempt to sabotage a share-sale at the conglomerate's flagship firm.
"The maliciously mischievous, unresearched report published by Hindenburg Research on January 24, 2023 has adversely affected the Adani Group, our shareholders and investors. The volatility in Indian stock markets created by the report is of great concern and has led to unwanted anguish for Indian citizens," the group's lead head Jatin Jalundhwala said in a statement.
As per an official tweet, Hindenburg Research has said that it stands by its report and any legal action taken against the organisation will be ‘meritless.’ Adding weight to its side of the arguments, Hindenburg also said that if Adani files a lawsuit in the USA, it would demand a long list of documents, in a ‘legal discovery process.’
