Hindenburg report alleges financial fraud; Adani Group shares fall upto 5%

Stocks of the Adani Group fell sharply during trading on January 25 as a result of a Hindenburg Research study that accused the billionaire Gautam Adani-owned conglomerate of financial fraud. Hindenburg is a well-known short seller in the US

According to the report, the short-seller holds short positions in the Adani Group stocks using derivatives that are traded outside of India and US-traded bonds. Short-selling is an investment strategy in which an investor borrows securities and sells them in the future to repurchase them at a lower price.

According to a report in Business Today, Adani Ports fell approximately 5% to Rs 725 on Wednesday before making a modest comeback to Rs 731.05 level as of 9.55 am. Before the opening of its follow-on public offering (FPO) for Rs 20,000 crore on January 27, Adani Enterprises fell 3% to Rs 3357.10 during the session. Adani Wilmar, one of the stocks in the Adani Group, fell 4% to Rs 551.35, and Adani Power also had similar declines to trade at Rs 264 on Wednesday, according to the report. New Delhi Television (NDTV), the newest acquisition of Gautam Adani, also experienced a 4% decline, The News Minute reported.

As worries about the financials of important firms were raised in the Hindenburg report, the shares of Adani Group took a significant hit. The Hindenburg study stated that major listed Adani companies have taken on significant debt, including pledging shares of their inflated stock for loans, placing the entire group on a perilous financial footing. Hindenberg's activist short-seller is renowned for taking after corporate fraudsters and research papers that cause firms' stocks to plummet.

The report comes as Adani, Asia's richest man with an estimated net worth of $118 billion, presses ahead with a fundraising effort to support the rapid growth of his existing industrial, fossil fuel, and green energy firms.

“Even if you ignore the findings of our investigation…[Adani Group’s] key listed companies have 85 per cent downside purely on a fundamental basis owing to sky-high valuations,” the Hindenburg report stated.

According to Gautam Adani, the valuations of his firms are justified. According to a Financial Times report, the business tycoon announced plans to raise the number of freely traded shares in Adani Enterprises last year after the company's share price increased more than 3,300% in three years.

According to the FT report, Indian regulators have already looked into the shareholdings of many Mauritius-based investment funds that have long-held positions in Adani Enterprises and other publicly traded Adani Group entities.

The mining and burning of coal is a major source of income for the Adani Group. By investing $70 billion by 2030 in industries ranging from the production of solar panels to green hydrogen, the corporation hopes to diversify its business and rank among the biggest players in the green energy market globally.