More than three weeks after the release of a sizable report by U.S. activist short seller Hindenburg Research alleging widespread fraud and stock manipulations at India’s Adani Group, share prices of the conglomerate have not recovered. As of the close of markets on February 14, stocks of Adani Enterprises – the group’s flagship holding company – listed for just around half the price they had reached on January 23, the day before Hindenburg’s publication.
The weeks since then have been tumultuous ones for Adani Group, with stock prices rising and falling – at one time peaking so quickly that trading was stopped. However, almost a month into the affair, it might be the case that some significant long-term damage has been done to the Adani share price.
Stocks of Adani Enterprises initially decreased in value slowly and then took a nose dive Friday in the week of publication. Over the weekend, the group’s chairman Gautam Adani issued a rebuttal, upon which the stock in question rose again the following Monday and Tuesday, the last two days of January. On February 1, Adani Enterprises said it was rescinding a follow-up public offer worth 20,000 crore Indian rupees ($2.4 billion). The company’s stock plummeted to new lows upon the announcement, falling to valuations as low as 46 percent of the January 23 stock price. On February 6, Adani Group announced the repayment ahead of schedule of a $1.1 billion loan. Share prices recovered quickly upon the news – so fast that trading was momentarily halted - but the momentum did not last, especially since media reported on February 8 that the company had faced a margin call on the loan, meaning that the grantee had called upon Adani to provide additional securities.
Gautam Adani has said the accusations made by Hindenburg Research were untrue and that they were a “calculated attack on India”. Hindenburg has meanwhile answered that “fraud cannot be obfuscated by nationalism”. While the worst of losses and revelations might be yet to come in the saga, significant damage to Adani’s valuation could stick around. Also, Adani Enterprises has been removed from the Dow Jones Sustainability Indices, stricken off the Credit Suisse, Standard Chartered and Citibank bond collateral lists while also having occupied the Indian Supreme Court and the UK’s Financial Conduct Authority in the past weeks.
