Shares of Adani drop after wagers against conglomerate by Hindenburg Research
Following the publication of a study by short seller Hindenburg Research targeting the conglomerate run by billionaire business leader Gautam Adani, shares in listed firms connected to India’s massive Adani Group dropped.
In morning trading on Wednesday, shares in seven publicly traded Adani group firms were down between 1 and 2%, with those in the group’s flagship company Adani Enterprises plunging as high as 2.4%.
The enterprises owned by Adani are growing quickly. The self-made businessman began his career in the 1980s as a commodity trader before developing India’s largest private infrastructure group, which now includes about a dozen ports and eight airports. The business has numerous subsidiaries in a variety of industries, including as data and defence.
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A short position on Adani Group companies was taken, according to Hindenburg, “via U.S.-traded bonds and non-Indian-traded derivative instruments.” An inquiry for comment was not immediately answered by an Adani Group official.
The news comes as Adani, whose net worth is estimated to be $118 billion, according to Bloomberg, places him as Asia’s richest person, pushes forward with a funding campaign to support the rapid expansion of both his existing industrial and fossil fuel organisations as well as renewable energy firms.
Even if you ignore the results of our study, the analysis from Hindenburg, which was released on Wednesday morning ahead of market open in Mumbai, claims that “[Adani Group’s] core listed companies have 85% downside merely on a fundamental basis owing to sky-high valuations.”
The multibillionaire businessman has insisted that his enterprises are valued fairly.
After the company’s share price increased by more than 3,300% in just three years, Adani announced plans to raise the number of openly traded shares in Adani Enterprises last year.
Indian regulators had already looked into the shareholdings of various Mauritius-based investment vehicles that have long held stakes in Adani Enterprises and other listed Adani Group entities.
Concerns regarding the debt-fueled expansion of Adani Group have been voiced by analysts, who point out that the conglomerate’s overall debts, which total nearly Rs2 trillion (about $24 billion), are comparable to nearly seven times pre-adjusted earnings.
According to the multibillionaire businessman, some analysts “have not comprehended [his enterprises] in actual terms,” he told the Financial Times in December.
“My lenders, banks, and international investors are those who comprehend. They love to invest whenever Adani enters the market. And it is how we maintain our growth.
The Adani Group, which earns a substantial portion of its income from mining and burning coal, has committed to invest $70 billion in green energy-related projects by 2030, including everything from the production of green hydrogen to solar panel manufacture.
Adani tried a hostile takeover of Indian broadcaster NDTV last year in an effort to establish a media company.