Adani group stocks took a hit in light of the Hindenburg report, with shares plunging on Friday. According to reports, the seven Adani Group companies lost Rs 4.2 Lac crores in market capitalisation since January 25, 2023.
Hindenburg Research’s report alleges multiple serious issues with the Adani family and their group of companies, including the purported use of inflated stock as collateral for loans, possible insider trading, and the misrepresentation of financial information. The report also claims that the Adani Group’s businesses are largely built on government subsidies and that their profits are overstated.
According to their website, Hindenburg has flagged possible wrongdoing in at least 16 companies since 2017, These are the Companies targeted by Hindenburg Research in the past that have been the subject of Hindenburg’s reports include Nikola, Kandi, Clover Health, SC Worx, Lordstown Motors, Tecnoglass, Riot Blockchain, HF Foods and others.
Who Is Behind Hindenburg Research?
Hindenburg Research is a forensic financial research firm founded in 2017 by Nathan Anderson. The firm specializes in analysing equity, credit, and derivatives markets. The name Hindenburg is derived from the 1937 airship disaster.
What Is Hindenburg Disaster?
The Hindenburg disaster was an airship accident that occurred on May 6, 1937, in Manchester Township, New Jersey, United States. The German passenger airship LZ 129 Hindenburg caught fire and was destroyed during its attempt to dock with its mooring mast at Naval Air Station Lakehurst. The accident caused 35 fatalities (13 passengers and 22 crewmen) from the 97 people on board (36 passengers and 61 crewmen), and an additional fatality on the ground.
What Is Adani group Response?
Adani Group has denied the allegations in the Hindenburg report. In a statement released on January 28, 2023, the group said that it had taken legal action against Hindenburg Research and that its businesses were built on “strong fundamentals and ethical practices”. The group also released a presentation covering its response to the Hindenburg report.
Who Is Gautam Adani?
Gautam Shantilal Adani is an Indian billionaire industrialist who is the chairman and founder of Adani Group, a multinational conglomerate involved in port development and operations in India. He is also the president of Adani Foundation. As of January 2023, with a net worth of US$105 billion according to Forbes and $121 billion according to Bloomberg, Adani is the richest person in Asia and the 3rd richest person in the world. Adani was born in a family owning a textile business, but he was never interested in his family business and made his first million by trading in commodities. In 1988, he founded the Adani Group and it has since grown into a multinational conglomerate with interests in ports, airports, power generation and transmission, green energy, edible oil, and trading.
Adani has been credited with transforming the port sector in India, and his company has been involved in the development of several ports across the country. He is also the president of Adani Foundation, a philanthropic organization that works in the areas of education, health, and sustainable livelihoods. Adani has been honored with several awards, including the Padma Shri, India’s fourth-highest civilian award.
Which Institutions Invested The Most In Adani Groups?
According to Business Standard, Cresta has the biggest exposure to Adani companies with 99% of its investments in flagship Adani Enterprises Ltd. and Adani Transmission Ltd. Additionally, The Tribune India reports that institutions such as LIC, SBI, and other public sector banks have liberally financed the Adani Group, while private sector banks, mutual funds, and foreign institutional investors have also invested in Adani Group companies.
The Securities and Exchange Board of India (SEBI) has stated that it may use the Hindenburg report for its own probe into Adani Group companies. Additionally, SEBI has increased its monitoring of the Adani Group and has asked the company to provide additional information and documents related to the allegations in the Hindenburg report.
Is It Right Time To Invest In Adani Group Companies After Hindenburg Research Report?
It is difficult to determine the right time to invest in a company, as the stock market is unpredictable and can be subject to numerous external factors. However, Investing in Adani Group stocks is a personal decision and should be based on an individual’s risk appetite and financial goals. I recommend limiting exposure to Adani Group stocks to no more than 10% of your total portfolio. Additionally, it is important to research the company thoroughly and look for companies with strong fundamentals, such as a healthy balance sheet, a competitive advantage, and a good management team.
What Is The Future Of Adani Group Companies After Hindenburg Research Report?
It is difficult to predict the future of Adani Group following the Hindenburg report. The company has denied the allegations in the report and has taken legal action against Hindenburg Research. Additionally, the Adani Group has pledged to release a detailed rebuttal to the report and has stated that its businesses are built on strong fundamentals and ethical practices. Despite the controversy, Adani Group stocks have continued to rise, suggesting that investors may still be confident in the company’s future.
Conclusion
In my opinion, If you are a long term investor then no need to panic about this news. Heidenberg research has published a report without making any attempt to contact Adani Group or verify the factual metrics. This report is a combination of selective misinformation stale baseless and discredited allegations that have been tested and rejected by India’s highest Supreme courts. The timing of the reports publication clearly betrays a malafide intention to undermine Adani group’s reputation with the main objective of damaging the Biggest follow-on public offering (FPO) from Adani Enterprise.
The experienced investors has always reposed faith in Adani group on the basis of detailed analysis disclosures and reports published by Financial experts and leading National and international credit rating agencies. These informed and knowledgeable investors are not influenced by one-sided motivated and unsubstantial reports with vested interests. Adani Group is India’s leader in infrastructure and job creation is a diverse portfolio of Market leading businesses managed by CEOs of the highest professional caliber overseen by experts in various fields for several decade. The group has always been in compliance with Indian laws, regardless of jurisdiction and maintains the highest standard of corporate governance.
Disclaimer – I Am Not a SEBI registered Investment Advisor. Please consult your financial adviser before taking any financial decision.
If there’s anything you think I’ve missed – talk to me in the comments below!
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Hi Harsh, I am a long term investor of Adani groups. I am invested in them since early 2019. Should i sell now after the Hindenburg report?
Hi Jitesh, If i were you, I won’t sell any Adani stock. I believe Adani group stocks will be back to their ATH price within 6 months from now… Wish you the best…
Disclaimer – I Am Not a SEBI registered Investment Advisor. Please consult your financial adviser before taking any financial decision.