Hindenburg Research has called the Gautam Adani-led Adani Group's 413-page response to its original report as hollow, accusing the energy to ports conglomerate of obfuscating its business with the Indian growth story. It says that the group addresses the concerns raised by it only fleetingly.
"It also predictably tried to lead the focus away from substantive issues and instead stoked a nationalist narrative, claiming our report amounted to a “calculated attack on India.” In short, the Adani Group has attempted to conflate its meteoric rise and the wealth of its Chairman, Gautam Adani, with the success of India itself", the report said. Adani sits among the world's top ten wealthiest individuals.
Out of the 413 pages that the Adani Group put forward, Hindenburg says that only 30 pages are of actual value that addresses the concerns raised by them. They also say that the response has 330 pages of annexures consisting of court records and 53 pages of unnecessary information.
"We also believe India’s future is being held back by the Adani Group, which has draped itself in the Indian flag while systematically looting the nation", the response said.
How the battle started
Their response came after the Adani Group on Sunday released a lengthy document that was itself a counter to allegations by Hindenburg Research that said the group was pulling a grand con.
The first punch was dealt by Hindenburg Research on January 25 after it released a research report accusing the group of stock manipulation, fraud and corporate misgovernance among other allegations. It also purported to show how the group concentrated wealth in the hands of a few and how loopholes were being exploited to keep promoter ownership of the group way over legal threshold.
After the release of the original report, the Adani Group responded by saying that the report was "baseless misinformation" and "discredited allegations".
But it was not public-interest research as it came with a disclaimer that Hinderburg had taken a position against companies of the group through securities like bonds and derivatives - implying that they stood to gain if the value of the Adani Group fell. The group raised this point to hit back at Hinderburg.
"This is rife with conflict of interest and intended only to create a false market in securities to enable Hindenburg, an admitted short seller, to book massive financial gain through wrongful means at the cost of countless investors", Adani's detailed response said. "This is not merely an unwarranted attack on any specific company but a calculated attack on India, the independence, integrity and quality of Indian institutions, and the growth story and ambition of India", the response added.
The Adani Enterprises FPO
The timing of the report on January 25 just came before the flagship company under the group, Adani Enterprises, approached the market for a follow-on public offer worth ₹20,000 crores - the largest ever such undertaking in India. The offer went live on January 27, with another two days to go.
The price band of the issue stands at ₹3,112 to ₹3,276 per share. When the issue was announced, the stock of Adani Enterprise was trading at more than ₹3,600 per share.
However, in line with all stocks of Adani Group, the price of the share crashed over two trading sessions on January 25 to 27 (January 26 was a holiday) where it closed at ₹2,761. The stock is currently trading at ₹2,882 rallying 9% today at its highest point of ₹3,020 after two days of a rout.
Adani Enterprises and Adani Ports and Special Economic Zones (APSEZ) are component stocks of the National Stock Exchange's benchmark NIFTY50 index. APSEZ also witnessed a massive selloff, falling to ₹602 (1.32% up on the National Stock Exchange) from ₹753 on January 25.
Other companies in the Adani Group have fallen today as well.
Adani Power, NDTV, Adani Wilmar and ACC are locked in the 5% lower circuit. Adani Green is down 18% while Adani Total Gas and Adani Tranmission are down 20% each.
Ambuja Cements though is up 2%
Also Read: Adani Group Refutes Research By Hindenburg, Says Report Aims To Damage FPO