Shares of Adani group of companies fell sharply during Wednesday’s trading session following a report by US-based Hindenburg Research
. Hindenburg says it holds short positions in Adani group companies through US-traded bonds and non-Indian-traded derivatives, along with other non-Indian-traded reference securities. All the Adani group stocks declined, with its flagship company Adani Enterprises Ltd (AEL), falling by more than 3% during the morning session. Adani group, however, has called the Hindenburg Research report as "a malicious combination of selective misinformation and stale, baseless and discredited allegations that have been tested and rejected by India's highest courts."
After recovering from a low of Rs3,315.70, Adani Enterprises ended Wednesday 1.54% down at Rs3,389.85 on the BSE, while the 30-share Sensex closed the day 773 points down at 60,205.06 points. Adani Ports and Special Economic Zone Ltd tumbled 6.3% to Rs712.90, while Adani Power Ltd closed 5% down at Rs261.10.
Shares of Adani Transmission Ltd ended Wednesday 8.87% down at Rs2,511.75, Adani Green Energy Ltd closed 3.04% down at Rs1,855.45, while Adani Total Gas Ltd fell nearly 6% to Rs3,668.15 and Adani Wilmar Ltd declined 5% to end the day at Rs544.50 on the BSE.
The US-based investment research firm with a focus on activist short-selling claims, "the seven key listed companies of Adani group are 85%+ overvalued even if you ignore our investigation and take the companies' financials at face value."
Adani group is in the process to launch its mega Rs20,000 crore follow-on public offering (FPO) for its flagship, Adani Enterprises.
In a statement, Jugeshinder Singh, group chief financial officer (CFO) of Adani group, says, "The timing of the report's publication clearly betrays a brazen, mala fide intention to undermine the Adani group's reputation with the principal objective of damaging the upcoming follow-on public offering from Adani Enterprises, the biggest FPO ever in India. The investor community has always reposed faith in the Adani group on the basis of detailed analysis and reports prepared by financial experts and leading national and international credit rating agencies. Our informed and knowledgeable investors are not influenced by one-sided, motivated and unsubstantiated reports with vested interests."
Last year in October, shares of Adani group of companies suffered huge decline. The same stocks have put in a massive rally over the past three years. The correction in October was attributed to the global negative macro-economic environment and the group’s huge debt. Adani groups’ debt papers have been falling, in contrast to its rising equity shares.
While the stocks of Adani group have outperformed the markets, its debt instruments are facing a rout. The bonds of Adani group companies have declined this year due to concerns about the group debt. According to Bloomberg, bonds of group companies, including Adani Green Energy and Adani Transmission Step-One Ltd, mostly underperformed the broader Indian market. (Read: Adani Stocks Crash on Monday