A month after Hindenburg report: It's business as unusual for Adani Group

As on December 2022, retail investors held between 1 per cent and 11 per cent in the 10 Adani group stocks

Adani Group stocks continued to reel under pressure even a month after the US-short seller Hindenburg Research’s scathing report, alleging irregularities in the group, was made public on January 24.

The 10 group stocks have lost an average of Rs 52,343 crore each day since the release of the report. The total market capitalisation or m-cap erosion for the group has been Rs 12.05 trillion ($145 billion), or 63 per cent, from Rs 19.2 trillion in just one month — in what is called the biggest-ever wipeout of wealth globally.

Gautam Adani’s ranking on the Bloomberg Billionaires Index has slipped from number 4 on January 24 to number 29, with an erosion of close to $80 billion in wealth in just 23 trading sessions.

With a total m-cap of Rs 7.16 trillion, the conglomerate is now fourth biggest after the Tata group, Reliance and the Rahul Bajaj group. Before the Hindenburg report, the Adani Group ranked number two -- just behind the Tatas.

As a result, India’s m-cap too has fallen by Rs 20.4 trillion -- from Rs 280.4 trillion to Rs 260 trillion -- during the period, with the country’s ranking on the global m-cap league table falling from five to seven. Bulk of this erosion has been on account of the fall in Adani Group stocks.

The Nifty 500 index — a gauge for the performance of the country’s top 500 stocks — has declined nearly 5 per cent since January 24, signally that the Adani saga has also weighed on the overall performance of the market.

The fall in the Adani Group stocks has impacted the average investor on the Street. On January 30, insurance major Life Insurance Corporation, in a statement, had said that its total purchase value of Adani Group stocks worked out to Rs 30,127, which has now declined to around Rs 25,000 crore. To be sure, one cannot ascertain if the state-owned insurer has sold any of its Adani holdings or purchased more shares since the release of the Hindenburg report.

In comparison, domestic mutual funds had limited exposure to the firm’s. Most of it is through index funds and exchange traded funds linked to the Nifty 50 and Nifty Next 50 index.

Meanwhile, Adani Enterprises and Adani Ports & SEZ, down 62 per cent and 27 per cent, respectively, since January 24, are part of Nifty 50 index, which is tracked by funds with assets under management of over Rs 2 trillion. Although both stocks now have a combined weighting of less than 2 per cent.

As the end of December 2022, retail investors held between 1 per cent and 11 per cent in the 10 Adani Group stocks. The highest -- 11 per cent in ACC. Direct retail holdings in Adani Total Gas, Adani Transmission and Adani Green Energy — which have declined the most — stood at 2 per cent, 1 per cent and 2 per cent, respectively.