Adani Group stocks still reeling from losses inflicted by Hindenburg report

By Chiranjeevi Chakraborty and Subrat Patnaik

About four months after US-based research firm Hindenburg rocked Indian financial markets with a surprise report on the Adani Group, the conglomerate’s shares are finding it hard to shake off the impact.

While two of Adani’s 10 stocks have rebounded strongly, a full recovery to pre-Hindenburg levels seems a long way off. The group’s market capitalization remains down more than $100 billion since the Jan. 24 Hindenburg report, which claimed that billionaire Gautam Adani’s empire was “pulling the biggest shenanigans in the company’s history.” The rout reached $153 billion at one point.

Adani shares saw an adjustment in their valuations. The pre-Hindenburg churn is gone and won’t come back again, said Abhay Agarwal, founder and fund manager at Mumbai-based investment firm Piper Serica Advisors Limited. than in the aftermath of the Hindenburg Report, it is less likely to erase all losses over the next three, six, or even twelve months.”

Overall, the average decline in Adani’s 10 shares over four months was 23%. That’s more than a 19% average loss over a similar period for shares of some of the other major companies Hindenburg has been targeting since 2020, including Adani.

The Indian group was one of the most high-profile targets for Nathan Anderson, which has had a string of often successful bets from electric car maker Nikola Corp. and Icahn Enterprises LP.

The short seller’s attack has left the group re-evaluating its grand ambitions after it took on one of India’s heaviest debt loads to fund new areas of growth. Adani — who has been closely associated with Prime Minister Narendra Modi’s nation-building efforts and has seen explosive growth in his group since the leader came to power — has begun backing away from his ambitions to delve deeper into aluminum, steel and road projects, Bloomberg News reports. in March, citing people familiar with the group’s inner workings.

Adani strongly denied Hindenburg’s allegations and maintained that he was fully compliant with disclosures required by local laws. The group did not respond to an email seeking comment for this story. Hindenburg also did not respond to emailed requests for comment by Bloomberg News.


Much of Adani’s stock rebound can be attributed to strong backing from star emerging markets investor Rajeev Jain, who serves as chief investment officer at GQG Partners LLC. The company helped stem the rout when it bought shares in four units of the Adani company from a family trust, and increased its holdings. Sentiment also rose after a panel appointed by India’s Supreme Court said it found no regulatory failure or signs of price gouging in Adani shares.

For their part, the businessman, his family and companies have prepaid some debts, bought back some bonds and held investor roadshows in a bid to restore confidence. In a report on Monday, the group said its main debt metrics had improved.

Crown jewel

The stock market recovery is being driven by cash-generating companies that hold some of the Adani Group’s most profitable assets.

Adani Ports & Special Economic Zone Ltd. – described by market watchers as the conglomerate’s crown jewel – in late May became the group’s first stock to briefly erase all losses since the Hindenburg attack. All 21 sell-side analysts tracked by Bloomberg have a Buy rating on the stock. Adani Power Ltd. About 6% away from regaining lost ground. India’s largest private coal-based power producer – saw its earnings more than double in the year ending in March.

Some gains may come after Indian stock exchanges announced an increase in the daily price ranges of four Adani Group companies from Wednesday. The maximum for Adani Power – which has risen in each of the last four sessions – is set to 20% from 5%.

After falling more than 80% since January 24, Adani Total Gas Ltd. The bulk of the selling is in Adani shares. Flagship Adani Enterprises Ltd is approximately 30% below its pre-Hindenburg level. On the debt side, Adani Ports’ note due in July 2024 is the only one of the group’s 15 dollar notes to recoup all losses, albeit for a short period.

Hindenburg said in its report that it took a short position in Adani group companies through US-traded notes and non-India derivatives instruments.

After campaigning against Adani, Hindenburg bets against Jack Dorsey’s Block Corporation and Icahn Ventures, which is headed by billionaire Carl Icahn. Shares of the latter fell 20% after Anderson took a short position — with losses extending to 56% as of the June 2 close.

Meanwhile, the broader Indian stock market appears to have upset the Adani-Hindenburg saga. The benchmark NSE Nifty 50 index is up around 7% this quarter and is close to surpassing an all-time high set in early December.

Investors in Adani shares are awaiting the results of an investigation by the Indian markets regulator into Hindenburg’s claims. The country’s supreme court has requested the investigation be closed by August 14. The regulator also proposes seeking more disclosure from foreign funds with large holdings in domestic stocks or companies, following criticism over a lack of oversight of inflows to sprawling conglomerates such as the Adani Group.

For now, investments from Jain of GQG Partners appear to be a major catalyst for Adani shares. He said last week that GQG valued Adani-related holdings at about $3.5 billion after stock prices rebounded from their post-Hindenburg lows.

“We are definitely interested in further investing in Adani,” GQG Partners’ Jane told Bloomberg News in an interview last week. But it depends on a lot of things, including pricing. Nothing is written in stone.”