A report published by American financial research firm Hindenburg Research has put Gautam Adani-led Adani Group in a difficult spot. The report, which alleges that the conglomerate is involved in ‘brazen stock manipulation and accounting fraud scheme’, has resulted in huge losses in market capitalisation for several Adani Group companies on the stock market.
Following this, Adani Group retorted that Hindenburg’s accusations are based on misinformation and termed it as 'stale and baseless'. The group further claimed that the report has mala fide intentions and that it is timed to sabotage the upcoming FPO of Adani Enterprises. The share sale of Rs 20,000 crore will open for subscription on 27 January.
Since Hindenburg’s report had an immediate impact on Adani stocks, and Adani Group released a quick statement refuting the report, the American research firm is clearly at loggerheads with India’s most valued conglomerate.
This is not the first time that an international research firm has put Adani Group in a tough spot. In September 2022, Fitch Group unit CreditSights published a report that raised credit concerns over multiple Adani companies. The conglomerate’s debt levels came under scrutiny which consequently sent the shares of Adani companies tumbling on the bourses.
However, after a follow-up meeting with some Adani Group executives, CreditSights clarifed that the firm had made some misjudgments in the report. Later, the credit research firm changed the EBITDA estimates and gross debt estimates of Adani Transmission and Adani Power respectively to signal a healthier debt level for the Adani companies.
The incident showcased how the conglomerate led by Asia’s richest man Gautam Adani can persuade global research firms to reconsider their views on Adani Group. Another similar incident in October 2022 further proves this point.
In October 2022, S&P Global Ratings withdrew its rating for Adani Transmission at the company’s request. S&P had clarified that the removal of its BBB- rating came after restructuring exercises at the company. However, the ratings firm had added that revision of rating did not weaken the protection for bondholders.
As Adani Enterprises gears up for its upcoming FPO, which is India’s largest FPO till date, it is evident that the Hindenburg report has dampened the excitement for Adani stocks in the market. Now, it is remains to be seen whether Hindenburg Research can double down on its allegations against Adani Group or whether the conglomerate can convince Hindenburg to further substantiate the claims made in the report.