Shares of nine Adani Group stocks continued to witness steep selling pressure for second trading session after US-based Hindenburg Research LLC said it shorted Adani Group companies due to "brazen" market manipulation and accounting fraud.
Ambuja Cements (down 20%), Adani Total Gas (down 20%), ACC (down 14.86%), Adani Green Energy (down 19.59%), Adani Transmission (down 19.54%), Adani Ports and Special Economic Zone (down 18.28%), Adani Enterprises (down 9.11%), Adani Wilmar (down 5%), Adani Power (down 5%) slumped.
In an exchange filing made yesterday, Jatin Jalundhwala, Group Head - Legal, Adani, said: The maliciously mischievous, unresearched report published by Hindenburg Research on 24 Jan 2023 has adversely affected the Adani Group, our shareholders and investors. The volatility in Indian stock markets created by the report is of great concern and has led to unwanted anguish for Indian citizens.
Clearly, the report and its unsubstantiated contents were designed to have a deleterious effect on the share values of Adani Group companies as Hindenburg Research, by their own admission, is positioned to benefit from a slide in Adani shares. [We hold short positions in Adani Group Companies through U.S.-traded bonds and non-Indian-traded derivatives, along with other non-Indian-traded reference securities.]
We are deeply disturbed by this intentional and reckless attempt by a foreign entity to mislead the investor community and the general public, undermine the goodwill and reputation of the Adani Group and its leaders, and sabotage the FPO (Follow-on Public Offering) from Adani Enterprises.
We are evaluating the relevant provisions under US and Indian laws for remedial and punitive action against Hindenburg Research.
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As per reports, Hindenburg Research said that the company hasn't addressed a single substantive issue raised in the 32,000-word report. "At the conclusion of our report, we asked 88 straightforward questions that we believe give the company a chance to be transparent. Thus far, Adani has answered none of these questions," the short seller has reportedly said.
On the threat of legal action, Hindenburg Research has reportedly said that it welcomes it. "We fully stand by our report and believe any legal action taken against us would be meritless. If Adani is serious, it should also file suit in the U.S. where we operate. We have a long list of documents we would demand in a legal discovery process."
Hindenburg, an US-based investment research firm that specializes in activist short-selling, has made wide-ranging allegations of corporate malpractice following a two-year investigation into the Adani group companies.
The Adani Group's seven key listed companies have 85% downside purely on a fundamental basis, owing to sky-high valuations, the report said.
The report was released ahead of the Rs 20,000 crore follow-on public offer (FPO) by Adani Enterprises, the flagship company of the Adani Group. The FPO had raised Rs 5,984.9 crore from 33 anchor investors on Wednesday.
A foreign brokerage house has said that Indian banks have an exposure of Rs 81,200 crore to Adani Group, whose group debt is Rs 2 lakh crore (about $24 billion), according to media reports.
Meanwhile, the BSE data at 12:48 IST showed that the FPO has received bids for 2,25,408 shares as against 4,55,06,791 on offer.
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