Share prices of Adani Enterprises on Friday tumbled 15 per cent lower to Rs 508.45 apiece in the intraday trade triggering an automatic 105-minute trading halt, reported news agency AFP. This happened after Hindenburg Research, an investment research firm, published a report on Adani Group on January 24 saying that Adani Group has engaged in a “brazen stock manipulation and accounting fraud scheme over the course of decades.”


At 1.15 pm, the S&P BSE Sensex plunged over 1,000 points to 59,194. On the other hand, NSE Nifty50 was trading at 17,561, down 331 points.


Adani Group stocks on Friday sank up to 20 per cent in morning trade, after Hindenburg Research made damaging allegations. Shares of Adani Total Gas plummeted 19.65 per cent, Adani Transmission tumbled 19 per cent, Adani Green Energy plunged 15.50 per cent and Adani Enterprises tanked 6.19 per cent on the BSE. Also, Adani Ports and Special Economic Zone fell 5.31 per cent, Adani Wilmar dipped 5 per cent and Adani Power declined 4.99 per cent.


Here Is What Has Happened So Far


On January 24, a US-based investment research firm, Hindenburg Research, alleged that Adani Group had engaged in “a brazen stock manipulation and accounting fraud scheme”. It also accused the conglomerate of improper use of offshore tax havens and flagged concerns about the group’s high debt.


On the day shares of Adani Group companies eroded Rs 85,761 crore in market value. Adani Group dismissed the report, saying it's a “malicious combination of selective misinformation and stale, baseless and discredited allegations that have been tested and rejected by India’s highest courts”.


Hindenburg Research report came just two days before the launch of the Rs 20,000-crore FPO by 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," Jugeshinder Singh, the chief financial officer of Adani Group, said in a statement.


On Thursday, Adani Group said that they are planning to sue Hindenburg Research for the “malafide and mischievous” report. 


“We are evaluating the relevant provisions under US and Indian laws for remedial and punitive action against Hindenburg Research,” the group said in a statement. Jatin Jalundhwala, Adani Group Head, Legal said, “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.”


Responding to this Hindenburg Research said on Twitter, “In the 36 hours since we released our report, Adani hasn’t addressed a single substantive issue we raised. If Adani is serious, it should also file suit in the US where we operate. We have a long list of documents we would demand in a legal discovery process.”


What is Hindenburg Research? Know The People Behind Them


On its website, Hindenburg Research says that the company specialises in forensic financial research. It says it has “experience in the investment management industry spans decades, with a historical focus on equity, credit, and derivatives analysis.”


The firm was founded by Nathan (Nate) Anderson in 2017. According to media reports, he lived in Jerusalem before returning to the US. He took a consulting job with a financial software company called FactSet and then at broker-dealer firms in Washington and New York. 


Hindenburg Research Reports


In 2020, Hindenburg Research released a report on Nikola, an American manufacturer of heavy-duty commercial battery-electric vehicles, titled "Nikola: How to Parlay An Ocean of Lies Into a Partnership With the Largest Auto OEM in America". It said that "a vast array of alleged lies and deceptions by Nikola in the years leading up to its proposed partnership with General Motors".


Nikola was charged with duping investors by telling them about their new vehicles when no such vehicles existed in reality. The firm has also released reports on WINS Finance, China Metal Resources Utilization, HF Foods, and Riot Blockchain.


The company says it looks for “accounting irregularities; bad actors in management or key service provider roles; undisclosed related-party transactions; illegal/ unethical business or financial reporting practices; and undisclosed regulatory, product, or financial issues” in companies.


Hindenburg Research Report On Adani Group


Hindenburg Research Report accused Adani family members of creating and managing “a vast labyrinth of offshore shell entities” in tax havens like Mauritius, Cyprus, and the UAE. The report claimed that some of these entities were used for market manipulation. It identified 38 Mauritius-based entities controlled by Vinod Adani, the elder brother of billionaire Gautam Adani, and his close associates.


The Hindenburg report also said, the coal import over-invoicing investigation by the Directorate of Revenue Intelligence (DRI) involved other Indian companies and public sector firms, some of the group entities like Adani Enterprises and Adani Total Gas were audited by a small firm with only four partners and 11 employees. Hindenburg asserted that the seven listed companies of the Adani group have an 85 per cent downside merely on a fundamental basis due to sky-high valuations, even if investors disregard the conclusions of its analysis and accept the financials of the Adani group at face value.


The issue has now spilled over into the political realm. Congress leader Jairam Ramesh tweeted on the "damning report on the Adani group". 






Adani Group in response said, “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.”


“The Adani group, which is India’s leader in infrastructure and job creation, is a diverse portfolio of market-leading businesses managed by CEOs of the highest professional caliber and overseen by experts in various fields for several decades. The group has always been in compliance with all laws, regardless of jurisdiction, and maintains the highest standards of corporate governance,” the company said.