Hindenburg Report Malicious Combination Of Selective Misinformation, Timed To Damage FPO: Adani Group

Adani Group criticised the Hindenburg report, stating that it is timed with a "mala fide intention" to damage Adani Enterprises FPO.

The report by Hindenburg Research questioned the accounting and corporate governance practices of Adani Group.

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A day after Hindenburg Research published a report against Adani Group, the Indian conglomerate's shares plummeted on the Indian stock exchanges on Thursday. The group led by Asia's richest man criticised the Hindenburg report, stating that it is timed with a "mala fide intention" to damage Adani Enterprises FPO.

"We are shocked that Hindenburg Research has published a report on 24 January 2023 without making any attempt to contact us or verify the factual matrix. The report is a malicious combination of selective misinformation and stale, baseless and discredited allegations that have been tested and rejected by India’s highest courts," Adani Group said in a media statement.

Jugeshinder Singh, Group CFO Adani, said the timing of the report is to undermine the group’s reputation and has an intention of "damaging the upcoming Follow-on Public Offering from Adani Enterprises". 

"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," he said in the statement.

"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," the statement from Adani Group CFO further added.

The Adani Group further stated, "The Group has always been in compliance with all laws, regardless of jurisdiction, and maintains the highest standards of corporate governance."

Based on the overall sentiments in the backdrop Hindenburg report on Adani Group, the two key equity benchmarks, Sensex and Nifty, declined sharply on Wednesday. The S&P BSE Sensex tanked 774 points to close at 60,205 after it recovered from its intra-day low of 60,081. On the other hand, the NSE Nifty lost 226 points to close at 17,892.

The report by Hindenburg Research, titled 'Adani Group: How The World’s 3rd Richest Man Is Pulling The Largest Con In Corporate History', questioned the accounting and corporate governance practices of Adani Group, and also raised the issue of heavy debt.

As per the Hindenburg report, Gautam Adani, the founder and chairman of the Adani Group, has seen his net worth rise to approximately $120 billion mainly due to stock price appreciation in the group's 7 key listed companies. The listed companies have increased by an average of 819% in the past 3 years. However, the 7 key listed companies of the Adani Group have a significant downside risk of 85% based on their high valuations.

Additionally, these companies have taken on significant debt, including using their inflated stock as collateral for loans, which puts the entire group in a financially precarious position, the Hindenburg report mentioned.