Adani responds to Hindenburg report, but stocks continue descent

By Ambar Warrick 

Investing.com -- Adani Group hit back against a short seller report by Hindenburg Research on Monday, claiming that it complied with all regulatory requirements and disclosures, but shares of a bulk of firms under the Indian conglomerate slid further on Monday. 

Five out of the seven listed firms under the Adani Group extended their steep declines into a third straight session, with Adani Total Gas Ltd (NS:ADAG), Adani Green Energy Ltd (NS:ADNA), and Adani Transmission Ltd (NS:ADAI) losing between 13% and 18%. Adani Wilmar Ltd (NS:ADAW) and Adani Power Ltd (NS:ADAN) fell 5% each.

On the other hand, shares of Adani Enterprises Ltd (NS:ADEL) jumped over 6%, while those of Adani Ports and Special Economic Zone Ltd (NS:APSE) rose 4%, after tumbling roughly 20% in the past two days.

The Indian conglomerate issued a 413-page response to the Hindenburg report over the weekend, stating that it has acted in line with regulations, and that it is sufficiently hedged against future risks. 

It also dismissed allegations of fraud and money laundering against the group as “baseless,” and said that Hindenburg was driven by an ulterior motive, namely by profiting off the losses in Adani stocks. Adani referred to Hindenburg as the ‘Madoffs of Manhattan’ in its report.

Hindenburg responded to the Adani report on its website, stating that the firm largely failed in addressing the questions raised by its report last week. 

“We also believe that fraud is fraud, even when it’s perpetrated by one of the wealthiest individuals in the world,” Hindenburg said in a statement. 

In a report released last week, Hindenburg had raised concerns over Adani’s debt position, and had also accused the firm of engaging in widespread stock market manipulation and money laundering. The short seller said it had taken a position against Adani through its U.S. bonds and other derivatives.

The report triggered sharp losses in Adani’s listed firms, wiping out as much as $60 billion of value in a matter of days. It also came just as Adani Enterprises, the conglomerate’s flagship firm, embarked on a secondary share offering to raise over $2 billion.

Markets are now speculating whether the offering will be discounted or extended, given that Adani Enterprises shares are trading well below the minimum offered price. 

The Hindenburg report cost Gautam Adani, the Chairman of the Adani Group, his title as the third-richest man in the world, given that a bulk of his wealth was tied to the price of Adani stocks.