The Hindenburg vs Adani rout has reached a point where valuation guru Aswath Damodaran has come forward and laid the cards on the actual valuation of the Adani Enterprises stock as the Adani Group continues to navigate tricky waters. In an explosive blogpost dissecting the Adani crisis, Damodaran has valued Adani Enterprises share at Rs 945 a piece.
Explaining his stance and calling Hindenburg's claims a 'hyperbole,' Aswath Damodaran said that the market may have been overstretched when it valued Adani companies collectively at $220 billion. However, despite upbeat assumptions, Damodaran wrote, "I don't think that there is much doubt that the market was over stretched when it valued the Adani companies collectively at $220 billion (₹ 17,600 billion) and Adani Enterprises at $53 billion (₹ 4,243 billion). In fact, a valuation of Adani Enterprises with upbeat assumptions on revenue growth and operating margins, and without factoring any of the Hindenburg accusations of fraud and malfeasance, yields a value of just about ₹ 945 per share, well below the stock price of ₹ 3,858 per share."
It must be noted that when the Adani Group's falgship company Adani Enterprises opened its follow-on public offer (FPO), it was then that the over Rs 3,000 stock price was seen. However, ever since the Hindenburg accusations came to light, the stock has witnessed a massive selling spree, bringing down its value to historically low levels.
On Adani Enterprises stock price, Damodaran, in his blog post adds, "On the second question, even with the share price at 1,531 per share, I still think the company is priced too high, given its fundamentals (cash flows, growth and risk) and before factoring the damage that might have done to the company's reputation and long term value, by this short selling episode."
Disclaimer: This is a developing story. Please check back for more details.