Hindenburg vs Adani group: Due to several allegations made in the adverse report of Hindenburg Research a year ago, there was a sharp decline in the market valuation of Adani Group companies, but with the passage of time Adani Group has been successful in recovering this loss to a great extent. American short selling and research firm Hindenburg Research, in a report released on January 24, 2023, had accused Adani Group companies of stock price manipulation and financial irregularities. However, the group had completely rejected these allegations. But due to the allegations made by Hindenburg, there was heavy selling in the shares of the group companies. Due to loss of investor confidence, the combined market valuation of the group had at one time fallen by about $150 billion. During this period, the position of Adani Group chief Gautam Adani in the list of the world’s richest people had also gone down significantly. Before that report came, Adani was the second richest person in the world. Apart from this, a phase of regulatory investigation had also started on the basis of Hindenburg Report. Even in such an adverse environment, Adani has been successful to some extent in bringing his group back on track. Some of the 10 listed companies of the group have been successful in recovering their losses.
Before the report the market cap of the group was Rs 19.23 lakh crore
According to stock market data, the total market capitalization of Adani Group at present is around Rs 14.52 lakh crore. However, this is still about 24 percent less than the previous record of Rs 19.23 lakh crore before the Hindenburg Report. Apart from business strategies, the comments of the Supreme Court have also helped the group in improving its performance in the market. The top court had said that Hindenburg’s report cannot be considered ‘reliable’ nor should media reports be considered as the ‘ultimate truth’. Hindenburg Research has been adopting a strategy of betting on selected stocks and making profits by short selling if their prices fall after the release of its research report. Before Adani Group, she had also been successful in causing a big fall in the shares of many companies. Hindenburg had also issued a report against Twitter.
What was the allegation in the Hindenburg report?
The Hindenburg Report stated that major listed companies had taken on substantial debt, including pledging shares of their enlarged stock for loans. This has put the entire group in a precarious financial position. However, a year after that report, Adani Group has been successful in regaining the confidence of investors with its strong financial performance and operations. In the first half of the current financial year, pre-tax profit of the group companies jumped 47 percent to Rs 43,688 crore. Adani Group has planned a capital expenditure of Rs 7 lakh crore to expand its infrastructure business in the next decade. With this, Group Chairman Gautam Adani has once again reached 14th place in the list of the rich. According to Bloomberg Billionaires Index, Adani’s wealth is approximately $91 billion. Reliance Industries chief Mukesh Ambani is at 12th place with assets of $99.3 billion.
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