: Shares of Adani-linked companies slump as Indian conglomerate issues defense to short-seller claims

by | Jan 27, 2023 | Stock Market

Stocks of affiliated companies founded by Asia’s richest man Gautam Adani continued to fall in Mumbai markets on Friday, extending a slide after a U.S. short seller published its two-year investigation into the group’s business practices. The shares of flagship firm Adani Enterprises
sank as much as 20% and other linked companies saw similar losses on Friday. The sell-off intensified for the seven Mumbai-listed companies losing a combined $47 billion market cap since Hindenburg Research’s report came out on Wednesday.

Including Adani’s recent investments in cement – ACC
and Ambuja Cements
– Adani has lost a total $51 billion in market value since Wednesday.

The Adani Group, which went ahead with a share sale for Adani Enterprises, responded to the 100-page short seller dossier on Friday, which alleged “brazen stock manipulation and accounting fraud” from the Indian conglomerate. The group disputed the claims in a conference call with bondholders of Adani Ports & Special Economic Zone
branding Hindenburg’s report as “bogus” and telling investors the allegations of accounting fraud were “devoid of facts,” according to Bloomberg. In an 18-slide presentation named the “myths of short seller” accompanying the investor call and put on its website, the group stated eight of its nine portfolio companies are audited by one of the “big six” auditors. It added that six of its companies are “subject to specific regulatory review” for revenue, cost and capital spending. The presentation said many of Hindenburg’s claims were already disclosed by the company. It also defended itself over accounting, leverage and governance concerns. The Adani Group said publicly on Thursday that it was exploring taking legal action against U.S.-based Hindenburg Research. Its head of legal Jatin Jalundhwala had called it a “maliciously, mischievous, unresearched” report. Hindenburg hit back in a tweet shortly after. “Regarding the company’s threats of legal action, to be clear, we welcome it,” the research firm said. “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 the legal process.” Pershing Square Capital Management founder Bill Ackman called the Hindenburg report “highly credible and extremely well researched” in a tweet early Friday.

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