Rout At the Stock Market of India’s Adani Group Exceeds $51 Billion As Shares Fall Below Daily Limits

The fallout from a damning report by US short-seller Hindenburg Research speeded up the selloff in Gautam Adani’s business empire on Friday, wiping out more than $51 billion in market value in two sessions as the wealthiest man of Asia struggles to control the blowback.

The drubbing is stacking up strain on the Indian tycoon, eroding his net worth and threatening to sour investor sentiment toward his showpiece firm Adani Enterprises Ltd’s $2.5 billion share sale. Even after the Adani Group questioned Hindenburg’s accusations in a Thursday call with bondholders and promised to release a detailed rebuttal on Friday, losses worsened.

On Friday, Adani Enterprises lost nearly 19%, the most since 2017. The stock closed about 11% lower than the lower end of the price band established for the follow-on equity sale. Some units, such as Adani Green Energy Ltd. and Adani Total Gas, fell by the daily 20% limit on Wednesday, contributing to a $12 billion selloff in group companies. Volumes in these stocks were at least three times higher than their three-month average.

As trading resumed after Thursday’s holiday, the selloff weighed on sentiment in the broader Indian market. The benchmark NSE Nifty 50 Index fell 1.6%, the worst performance in Asia, with bank stocks leading the losses as investors worried about their exposure to the Adani group.

“The issues strike at the heart of the Indian corporate sector scene where a number of family-controlled conglomerates dominate,” said Gary Dugan, chief executive officer of the Global CIO Office. “By their very nature they are opaque, and global investors have to take on trust the issues of corporate governance.”

“After last year’s stellar performance, Indian equities and any high-profile company’s shares are open to downside risk of profit-taking,” Dugan added. “Hence, the broader Indian equity market could be at risk of further downside, with Adani the catalyst.”

The drop in Adani shares comes after spectacular gains in recent years, including some of Asia’s largest returns in 2022. Adani Enterprises’ five-year growth outpaced even Elon Musk’s Tesla Inc., propelling Adani from relative obscurity to the ranks of the world’s wealthiest people.

Adani’s fortune has fallen below the $100 billion mark, which he reached in April of last year. According to the Bloomberg Billionaires Index, it was around $93 billion at the close in Mumbai. Since Hindenburg’s report was published, he has lost roughly $26 billion, or more than one-fifth of his fortune.

Concerns about the conglomerate’s finances have persisted throughout Adani’s rise, with CreditSights reporting in August that Adani’s conglomerate is “deeply overleveraged” with “stretched balance sheets.” However, the Hindenburg report has shone a new light on the group’s corporate governance — as well as that of India as a whole.

Following a two-year investigation into the tycoon’s companies, Hindenburg issued a report on Jan. 24 detailing extensive allegations of corporate malpractice. Adani Group has stated that it is considering legal action in response to the short seller’s “maliciously mischievous, unresearched” report. Hindenburg has stated that it fully supports its report and that any legal action taken against it would be futile, according to a Twitter statement.

Companies affiliated with Adani Group intend to issue a detailed response to the “bogus” report on Friday, according to bondholders who participated in a conference call with Adani executives. During the call, investors were told that the claims of accounting fraud made by the US-based short seller were “devoid of facts.”

“It appears that there may be more downside, and this report may become a major legal issue as it is causing reputational damage,” said Sameer Kalra, founder of Mumbai-based Target Investing.

Hindenburg Research published its report at the same time that Adani Enterprises was looking to expand its network of local and global investors for its share sale.

The transaction, India’s largest-ever primary follow-on public offering, had already attracted a number of anchor investors before the Hindenburg report, but retail investors and high-net-worth individuals can bid for shares beginning today and continuing until January 31.

As of 3:30 p.m. in Mumbai, the overall subscription rate for the offering was 1%. According to stock exchange data, 1% of the shares reserved for retail investors were sold, while 4% were bid on by company employees. Typically, investors in Indian public offerings wait until the last day of the sale to place bids.

According to some market observers, the impact on the broader market will be limited.

The majority of India’s equity benchmarks are composed of “very high quality” banks, consumer and information technology firms, and the risk to the indexes from Hindenburg Research’s report on Adani Group “is not meaningful,” according to Neelkanth Mishra, co-head of Asia Pacific equity strategy and India equity strategist at Credit Suisse, on Bloomberg Television.

(Adapted from


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