New Delhi: What is the cost of a 106 page research report for the world’s second richest and Asia’s richest man Gautam Adani? More than $29 billion in just two trading sessions as the report by the New York-based short seller Hindenburg Research alleged accounting fraud and other corporate governance issues at Ahmedabad based Adani Group. It led to a massive rout in the stocks of Adani Group companies.
In just two sessions Gautam Adani’s wealth worth nearly 29 billion eroded while the overall loss to the Adani Group’s investors has been estimated at $48 billion or over Rs 4.17 lakh crore in just two days – Wednesday and Friday. Indian stock markets were closed on Thursday due to a national holiday on account of the Republic Day.
As per the latest stock market data, half of 10 Adani Group companies - Adani Ports, Adani Enterprises, Adani Transmission, Adani Green and Adani Total Gas - lost 18-20% each on the National Stock Exchange (NSE) on Friday, while another Adani Group company, Ambuja Cements lost 25% but recovered some losses at the close of trading session.
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As a result, according to reports, the Ahmedabad-based conglomerate threatened to sue Hindenburg Research as the market valuation of some of the Adani Group companies tanked on Friday. As per these reports, the market valuation of Adani Total gas (a partnership between European petroleum giant and Adani Group), declined by over Rs 1.04 lakh crore, Adani Enterprises by over Rs 77,000 crore, Adani Transmission by over Rs 83,000 crore and Adani Green Energy by nearly Rs 68,000 crores and Adani Ports by Rs 35,000 crore.
The massive loss in just two trading sessions showed the weakening investor sentiment in the Adani Group companies. The rout in the Adani Group companies severely impacted India’s two major stock exchanges as the benchmark 30-share sensitive index, the BSE SENSEX fell by 1600 points in just two trading sessions while another broad-based 50 share NSE NIFTY was down by 2 per cent during this period.
As the rout in Adani Group companies resulted in loss of shareholders' valuation by over Rs 4.17 lakh crore, the contagion spread with the BSE listed companies suffering a loss of market capitalization of over Rs 10 lakh crore in these two trading sessions. This massive rout brought down the personal wealth of Gautam Adani below $100 billion as he lost the title of the world's second richest man in just two sessions and settled as the 7th richest person in the world behind other richest persons such as Tesla's founder Elon Musk, Microsoft founder Bill Gates and maverick investor Warren Buffet.
Stunned by the massive rout in its shares, the port-to-energy-to-cement conglomerate has questioned the timing of Hindenburg Research report as the damaging report coincided with the Rs 20,000 crore follow on public offer (FPO) by the Adani Group to raise money from the capital market.
"Even if you ignore the findings of our investigation and take the financials of Adani Group at face value, its 7 key listed companies have 85% downside purely on a fundamental basis owing to sky-high valuations," Hindenburg Research's Nate Anderson said. The Hindenburg Research also clarified that it had taken short positions in Adani Group companies.
