The Nifty 50 dropped by 226.35 points to settle at 17,891.95, and the Sensex dropped by 773.69 points to close at 60,205.06 on Wednesday. The market value of Adani Group stocks fell during this severe market decline and lost more over Rs 40,000 crore.
Adani Wilmar closed yesterday 5% lower at Rs 544.50, Adani Green Energy closed yesterday 3.04% lower at Rs 1855.45, Ambuja Cements closed yesterday 7.71% lower at Rs 460.10, ACC closed yesterday 7.26% lower at Rs 2166, Adani Transmission closed yesterday 8.06% lower at Rs 2534.10, Adani Power closed yesterday 4.99% lower at Rs 261.10, Adani Ports closed yesterday 6.30% lower at Rs 712.90, Adani
Following the research by Hindenburg Research, which said that the Indian Conglomerate had participated in blatant stock manipulation and accounting fraud schemes over the course of decades, the group’s equities saw a significant decline. According to the analysis, if one were to take the Adani Group’s seven publicly traded firms’ financial statements at face value, they would be overvalued by more than 85%.
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After a research by Hindenburg Research claimed that the Indian conglomerate had participated in stock manipulation and accounting fraud schemes over the course of the previous several decades, the market capitalization of the ten listed Adani Group equities suffered on Wednesday. Following the claims, the overall market value of the group’s equities fell by Rs 96,672 crore, from Rs 19.20 crore on January 24 to Rs 18.23 crore.
The publication of Hindenburg Research’s study coincided with Adani Enterprises’ upcoming Friday announcement of its Rs 20,000 crore follow-on public offer for subscription.
Kranthi Bathini, Equity Strategist at WealthMills Securities, a market observer, commented: “The timing of this news is disputed. Although none of the points made in this study have recently occurred and they are not supported by any evidence, the fact that it was released at the same time as the company’s fundraising raises concerns.”
Bathini recommended current Adani shareholders to stay onto their investments.
Intrinsic Value Equity Advisors founder Nikhil Gangil stated, “At current levels, I would steer clear of Adani Group equities. It’s critical to remember that Hindenburg sells short-term securities. It is obvious that it has a plan for this kind of study report. However, several of the allegations made in the paper were already being spoken about among the investing community.”
Avoid or skip Adani Enterprises FPO?
The Rs 20,000-crore FPO from Adani Enterprises will begin accepting subscriptions on January 27. A publicly traded corporation can issue additional shares to potential investors or current shareholders through the public issue procedure. Companies can diversify their equity base by using FPO. For the quarter that ended on September30,2022, individual investors—including high-net-worth individuals (HNIs)—held a combined 2.22 percent ownership in Adani Enterprises. The deadline for submissions is January 31, 2023.
In order to encourage retail individual bidders to participate in the retail phase of the offer, the business has granted a discount of Rs 64 per equity share. Bathini stated: “The FPO will sail through” while discussing his opinions on the FPO. High-risk investors are welcome to participate in the FPO. However, investors should pay close attention to the company’s quarterly performance and future debt reduction plans.
According to the Hindenburg Research research, major listed Adani firms have incurred significant debt and pledged shares of their inflated stock as collateral for loans, placing the entire group on shaky financial ground.
According to data accessible with Ace Equity, promoter investments in Adani Enterprises were just 2.66 percent as of December 31, 2022. In the third quarter of FY23, promoters owned 72.63 percent of the firm. Promoters pledged 4.36 percent in Adani Green and 6.62 percent in Adani Transmission, respectively. However, promoter pledges for Adani Power, Adani Ports, and Special Economic Zone were 17.31% and 25.01%, respectively. According to the statistics, no promoter interests in Adani Wilmar or Adani Total Gas have been pledged.
Adani Group said in a regulatory filing that Hindenburg Research released the research without attempting to get in touch with them or confirm the factual matrix. Jugeshinder Singh, Group CFO of Adani, described the study as a “malicious combination of selective disinformation and outdated, unsubstantiated, and discredited charges that have been tried and dismissed by India’s highest courts.”
Jugeshinder Singh, the CFO of Adani Group, issued a statement shortly after the incident and expressed disbelief that Hindenburg Research had released a report on January24,2023, without attempting to get in touch with them or confirm the factual matrix. He referred to the study as “a vicious blend of selective misinformation and disinformation” and noted that the Adani Group has always complied with all laws and that the discredited charges have been examined and dismissed by India’s highest courts.
Watch the stocks of the Adani Group closely!