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Shares of India’s Adani Group Plunge After Scathing US Report

Shares of Adani companies fell on Wednesday after a report by Hindenburg Research accused the group of improper use of tax havens to manipulate stock prices

Indian billionaire Gautam Adani speaks during an interview with Reuters at his office in the western Indian city of Ahmedabad in this April 2, 2014 file photo
Hindenburg, a well known US short-seller, said key listed companies in the group controlled by billionaire Gautam Adani had “substantial debt”. Photo: Reuters


Shares of India’s Adani Group companies plunged on Wednesday after a US investment research group accused the conglomerate of extensive and improper use of offshore tax havens and voiced concern on its debt levels.

The report by Hindenburg Research – with the provocative title ‘Adani Group: How the World’s Third Richest Man is Pulling the Largest Con in Corporate History’ – comes just days ahead of a share offering by group’s flagship firm.

The $2.5-billion share offering by Adani Enterprises starts on Friday January 27 and ends on January 31.

Hindenburg, a well known US short-seller, said key listed companies in the group controlled by billionaire Gautam Adani had “substantial debt” which has put the entire group on a “precarious financial footing”.

It said that seven Adani listed companies have an 85% downside on a fundamental basis due to what it called “sky-high valuations”.

An Adani spokesperson did not immediately respond to a request for comment on the report, which Hindenburg said was based on research over two years that involved speaking with dozens of individuals, including former Adani executives as well as a review of documents.


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Adani company shares sink

Hindenburg said it held its short positions through US-traded bonds and non-Indian-traded derivative instruments.

It said Gautam Adani, founder and chairman of Adani Group, had amassed a net worth of about $120 billion, adding over $100 billion in the past three years “largely through stock price appreciation in the group’s seven key listed companies, which have spiked an average of 819% in that period”.

It alleges that Adani family members – said to hold eight of the group’s 22 top leadership roles – cooperated to create offshore shell entities in tax-haven jurisdictions like Mauritius, the United Arab Emirates, and Caribbean Islands to generate “import/export documentation in an apparent effort to generate fake or illegitimate turnover” or get money from its listed companies.

The report suggests that India’s securities regulator SEBI has enforced its listing regulations selectively.

“Our research indicates that offshore shells and funds tied to the Adani Group comprise many of the largest ‘public’ (ie, non-promoter) holders of Adani stock, an issue that would subject the Adani companies to delisting, were Indian securities regulator SEBI’s rules enforced.”

Adani has repeatedly dismissed debt concerns, but has yet to respond to these accusations, some of which have allegedly been probed by state entities.

Adani chief financial officer Jugeshinder Singh told media on January 21: “Nobody has raised debt concerns to us. No single investor has.”

In the wake of the Hindenburg report, Adani Ports And SEZ slid 7.3% to its lowest level since early July, while Adani Enterprises dropped 3.7% to a near three-month low.

Adani-owned cement firms ACC and Ambuja Cements fell 6.7% and 9.7% respectively.

Hindenburg’s report said that five of seven key listed Adani companies have reported current ratios – a measure of liquid assets minus near-term liabilities – below 1. This, the short-seller said, suggested “a heightened short-term liquidity risk.”


Gross debt of nearly $27 billion

Adani Group’s total gross debt in the financial year ending March 31, 2022, rose 40% to 2.2 trillion rupees ($26.94 billion).

Refinitiv data shows that debt at all the Adani Group’s seven key listed Adani companies exceeds equity, with debt at Adani Green Energy Ltd exceeding equity by more than 2,000%.

CreditSights, part of the Fitch Group, described the group last September as “over-leveraged” and said it had concerns over its debt. While the report later corrected some calculation errors, CreditSights said it maintained its concerns over leverage.

Hindenburg is known for shorting electric truck maker Nikola Corp and Twitter though it later reversed its position in Twitter.

Shares in Adani Enterprises surged 125% in 2022, while other group companies, including power and gas units, rose more than 100%.


  • Reuters with additional editing and reporting by Jim Pollard


NOTE: The photo on this report was changed on January 25, 2023.




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Jim Pollard

Jim Pollard is an Australian journalist based in Thailand since 1999. He worked for News Ltd papers in Sydney, Perth, London and Melbourne before travelling through SE Asia in the late 90s. He was a senior editor at The Nation for 17+ years.


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