Adani-Hindenburg saga continues
Shares of most of the Adani Group firms ended lower on Monday, a day after it released a 413-page response to allegations of wrongdoing brought by a US-based short seller Hindenburg Research. The US-based market research firm rubbished Gautam Adani led the group’s rebuttal by saying – “Fraud Cannot Be Obfuscated By Nationalism Or A Bloated Response That Ignores Every Key Allegation We Raised.” Hindenburg Research Tweeted on Monday:
Our Reply To Adani:
Fraud Cannot Be Obfuscated By Nationalism Or A Bloated Response That Ignores Every Key Allegation We Raisedhttps://t.co/ohNAX90BDf
— Hindenburg Research (@HindenburgRes) January 30, 2023
Many group companies have lost double-digit percentages
Since January 25 to January 30 (Stock Market was open only three days), the group firms have collectively lost more than Rs.5.56 lakh crore in market valuation. Stock markets were closed on Thursday on account of Republic Day. For the third straight trading session, most of the group firms declined, with Adani Total Gas tumbling 20 percent, Adani Green Energy plummeting 19.99 percent, Adani Transmission tanking 14.91 percent, and Adani Power declining 5 percent. Adani’s Total Gas tumbled over 39% in 3 days.
Some fared better and some have even risen!
Shares of Adani Wilmar fell 5 percent, NDTV (4.99 percent), and Adani Ports (0.29 percent) on the BSE.
However, the flagship firm Adani Enterprises shares climbed 4.21 percent, Ambuja Cements gained 1.65 percent and ACC went higher by 1.10 percent. On Friday, the Adani Group stocks fell up to 20 percent after Hindenburg Research made damaging allegations. Meanwhile, equity benchmarks, Sensex and Nifty, ended in the green on Monday.
Overall market impact
The 30-share BSE benchmark ended 169.51 points higher at 59,500.41 points, while the Nifty climbed 44.60 points to settle at 17,648.95 points. Gautam Adani’s group on Sunday expressed confidence that the Rs.20,000 crore follow-on public offering (FPO) of its flagship firm Adani Enterprises will sail through despite the massive hammering of the conglomerate’s stocks.
Banks feel the heat from their exposure
Banking counters and the Life Insurance Corporation of India (LIC) have also faced the heat amid concerns over their exposure to the Adani Group firms. In three days, shares of Bank of Baroda declined 10.93 percent, State Bank of India fell 9.42 percent and Life Insurance Corporation tanked 6.52 percent.
Abu Dhabi-based IHC a new saviour?
Amid a rout in stock prices caused by a US short seller’s allegations, Abu Dhabi-based International Holding Company (IHC) on Monday said it has invested AED 1.4 billion (USD 400 million – Rs.3600 crore) in the share sale of Adani Group’s flagship firm. The investment in Adani Enterprises’ follow-on public offering (FPO) was made through its subsidiary Green Transmission Investment Holding RSC Limited, a company statement said.
Hindenburg released its report on the day Rs.20,000 crore FPO of Adani Enterprise opened for subscription for anchor investors. The FPO, which closes on Tuesday, has so far subscribed only 3 percent. This is the second investment IHC has made in the Adani Group after last year’s Dh7.3 billion (USD 2 billion) investment in three green-focused companies of the conglomerate, including Adani Green Energy, Adani Transmission, and Adani Enterprises.
“Our interest in Adani Group is driven by our confidence and belief in the fundamentals of Adani Enterprises Ltd; we see a strong potential for growth from a long-term perspective and added value to our shareholders,” said Syed Basar Shueb, Chief Executive Officer, IHC.
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