About four months after the US short seller Hindenburg Research rocks Indian financial markets with a scathing report Adani The conglomerate’s shares are having a hard time getting rid of the impact.
While two out of 10 Adani stocks have made a strong comeback, a full recovery to pre-Hindenburg levels is a long way off. The group’s market value is still down more than $100 billion since Hindenburg’s January 24 report, which claimed the billionaire Gautam AdaniEmpire was “running the biggest scam in corporate history.” At one time this deficit had reached 153 billion dollars.
,Adani Stocks Have seen readjustment of their valuations. “The pre-Hindenburg froth is gone and will not return,” said Abhay Agarwal, founder and fund manager at Mumbai-based investment firm Piper Serica Advisors Ltd. As much as they were after the Hindenburg Report, all losses are unlikely to be erased in the next three, six or 12 months.
Overall, the average fall in the 10 Adani stocks in four months is 23%. This is higher than the 19% average loss over the same period for shares of some of the other major companies targeted by Hindenburg since 2020, including Adani.
The Indian conglomerate has been one of the most high-profile targets for Nathan Anderson’s company, with electric-vehicle makers Nikola Corp and Icahn Enterprises LP often having successful bets.
The onslaught of short sellers has left the group re-evaluating its grand ambitions after racking up one of India’s heaviest debt loads to finance new areas of growth. Adani – which is closely linked to Prime Minister Narendra Modi’s nation-building efforts and his group has seen explosive growth since the leader came to power – has scaled back on ambitions to pursue aluminum, steel and road projects. Bloomberg News reported in March, citing people familiar with the group’s inner workings.
Adani has vehemently denied Hindenburg’s allegations and said it fully complies with the disclosures required under local laws. The group did not respond to an email seeking comment for this story. Hindenburg also did not respond to email requests for comment by Bloomberg News.
Most of Adani shares’ revival can be attributed to strong support from star emerging-market investor Rajeev Jain, who serves as chief investment officer at GQG Partners LLC. The firm bought shares in four Adani units from a family trust and helped stem the rout by further diversifying its holdings. Sentiment also got a boost after a panel appointed by India’s top court said it found no regulatory failures or indications of price manipulation in Adani’s shares.
On their part, the tycoon, his family and companies are paying off some debt, buying back some bonds and holding investor roadshows to restore confidence. In a report on Monday, the group said that its key loan metrics have improved.
Crown jewel
The rebound in the equity market is being led by cash-generating businesses, which are some of the most attractive assets of the Adani Group.
Adani Ports and Special Economic Zone Ltd – regarded by market watchers as the crown jewel of the group – became the first group stock to briefly erase all losses since the Hindenburg attack in late May. All 21 sell-side analysts tracked by Bloomberg have a buy rating on the stock. Adani Power Ltd. is about 6% away from reclaiming lost ground. India’s largest private coal-based power producer – saw its profit more than double in the year ended March.
Some more gains may come after Indian exchanges announced an increase in the daily price bands for four Adani group companies with effect from Wednesday. Adani Power’s range – which has climbed in each of the last four sessions – is set to rise from 5% to 20%.
Down more than 80% since January 24, Adani Total Gas Ltd has borne the brunt of the selloff in Adani shares. Flagship Adani Enterprises Ltd is down nearly 30% from its pre-Hindenburg levels. On the debt side, Adani Ports’ $15 note due July 2024 is the only one of the group’s $15 bonds to have recouped all losses, albeit for a short period.
Hindenburg said in his report that he had taken short positions in Adani group companies through US-traded bonds and non-Indian-traded derivative instruments.
After campaigning against Adani, Hindenburg has bet against Jack Dorsey-led Block Inc and Icahn Enterprises, which is chaired by billionaire Carl Icahn. The latter’s shares plunged 20% after Anderson’s firm took short positions – extending losses to 56% by the end of June 2.
Meanwhile, India’s broader stock market has put the Adani-Hindenburg saga behind it. The benchmark NSE Nifty 50 index has gained nearly 7% this quarter and is close to surpassing the all-time high reached in early December.
Investors in Adani shares are awaiting the findings of an investigation by India’s market regulator into Hindenburg’s claims. The country’s top court has asked to close the investigation by 14 August. The regulator is also proposing to demand more disclosures from foreign funds with large holdings in local stocks or companies, such as the Adani Group following criticism about the lack of oversight on flows into giant conglomerates.
For now, Jain’s investments from GQG Partners appear to be a major catalyst for Adani shares. He said last week that GQG values Adani-related holdings at about $3.5 billion following a correction in share prices from post-Hindenburg lows.
“We are certainly interested in investing more in Adani,” Jain of GQG Partners told Bloomberg News in an interview last week. “But it depends on a lot of things, including pricing. Nothing is written in stone.”
While two out of 10 Adani stocks have made a strong comeback, a full recovery to pre-Hindenburg levels is a long way off. The group’s market value is still down more than $100 billion since Hindenburg’s January 24 report, which claimed the billionaire Gautam AdaniEmpire was “running the biggest scam in corporate history.” At one time this deficit had reached 153 billion dollars.
,Adani Stocks Have seen readjustment of their valuations. “The pre-Hindenburg froth is gone and will not return,” said Abhay Agarwal, founder and fund manager at Mumbai-based investment firm Piper Serica Advisors Ltd. As much as they were after the Hindenburg Report, all losses are unlikely to be erased in the next three, six or 12 months.
Overall, the average fall in the 10 Adani stocks in four months is 23%. This is higher than the 19% average loss over the same period for shares of some of the other major companies targeted by Hindenburg since 2020, including Adani.
The Indian conglomerate has been one of the most high-profile targets for Nathan Anderson’s company, with electric-vehicle makers Nikola Corp and Icahn Enterprises LP often having successful bets.
The onslaught of short sellers has left the group re-evaluating its grand ambitions after racking up one of India’s heaviest debt loads to finance new areas of growth. Adani – which is closely linked to Prime Minister Narendra Modi’s nation-building efforts and his group has seen explosive growth since the leader came to power – has scaled back on ambitions to pursue aluminum, steel and road projects. Bloomberg News reported in March, citing people familiar with the group’s inner workings.
Adani has vehemently denied Hindenburg’s allegations and said it fully complies with the disclosures required under local laws. The group did not respond to an email seeking comment for this story. Hindenburg also did not respond to email requests for comment by Bloomberg News.
Most of Adani shares’ revival can be attributed to strong support from star emerging-market investor Rajeev Jain, who serves as chief investment officer at GQG Partners LLC. The firm bought shares in four Adani units from a family trust and helped stem the rout by further diversifying its holdings. Sentiment also got a boost after a panel appointed by India’s top court said it found no regulatory failures or indications of price manipulation in Adani’s shares.
On their part, the tycoon, his family and companies are paying off some debt, buying back some bonds and holding investor roadshows to restore confidence. In a report on Monday, the group said that its key loan metrics have improved.
Crown jewel
The rebound in the equity market is being led by cash-generating businesses, which are some of the most attractive assets of the Adani Group.
Adani Ports and Special Economic Zone Ltd – regarded by market watchers as the crown jewel of the group – became the first group stock to briefly erase all losses since the Hindenburg attack in late May. All 21 sell-side analysts tracked by Bloomberg have a buy rating on the stock. Adani Power Ltd. is about 6% away from reclaiming lost ground. India’s largest private coal-based power producer – saw its profit more than double in the year ended March.
Some more gains may come after Indian exchanges announced an increase in the daily price bands for four Adani group companies with effect from Wednesday. Adani Power’s range – which has climbed in each of the last four sessions – is set to rise from 5% to 20%.
Down more than 80% since January 24, Adani Total Gas Ltd has borne the brunt of the selloff in Adani shares. Flagship Adani Enterprises Ltd is down nearly 30% from its pre-Hindenburg levels. On the debt side, Adani Ports’ $15 note due July 2024 is the only one of the group’s $15 bonds to have recouped all losses, albeit for a short period.
Hindenburg said in his report that he had taken short positions in Adani group companies through US-traded bonds and non-Indian-traded derivative instruments.
After campaigning against Adani, Hindenburg has bet against Jack Dorsey-led Block Inc and Icahn Enterprises, which is chaired by billionaire Carl Icahn. The latter’s shares plunged 20% after Anderson’s firm took short positions – extending losses to 56% by the end of June 2.
Meanwhile, India’s broader stock market has put the Adani-Hindenburg saga behind it. The benchmark NSE Nifty 50 index has gained nearly 7% this quarter and is close to surpassing the all-time high reached in early December.
Investors in Adani shares are awaiting the findings of an investigation by India’s market regulator into Hindenburg’s claims. The country’s top court has asked to close the investigation by 14 August. The regulator is also proposing to demand more disclosures from foreign funds with large holdings in local stocks or companies, such as the Adani Group following criticism about the lack of oversight on flows into giant conglomerates.
For now, Jain’s investments from GQG Partners appear to be a major catalyst for Adani shares. He said last week that GQG values Adani-related holdings at about $3.5 billion following a correction in share prices from post-Hindenburg lows.
“We are certainly interested in investing more in Adani,” Jain of GQG Partners told Bloomberg News in an interview last week. “But it depends on a lot of things, including pricing. Nothing is written in stone.”