Just a year back, the world was shocked by the news that a person from India, Mr. Gautam Adani was the second richest person on the planet. This was beyond the wildest imaginations of the traditionalists in the west. He was the richest person in Asia since February 2022 and his stocks were seeing a meteoric rise that was unprecedented not only in the Indian markets but also abroad. Fast forward to 2023 and the new year did not bring any good luck to Mr. Adani. The recent Hindenburg Report that came out in January 2023 laid many serious allegations on the Adani Group and the result was an immediate crash in the stock prices of all 10 Adani stocks. Mr. Gautam Adani is now even out of the list of top 30 billionaires in the world and ranks 33rd as per Forbes Real-Time Billionaires List. However, there is little relief for the Adani Group as 8 out of the 10 listed companies have closed in the green after taking a lot of heat since the release of the report. So is it all good for Adani now? Let's check it out in this article hereunder.
Towards the end of January 2023, a US-based investment research firm released a scathing report on the Adani Group levelling many serious allegations behind the stupendous increase in the wealth of Mr. Gautam Adani and the operations of their group companies. These allegations include stock manipulation, accounting fraud, and corporate malfeasance. These allegations have been refuted to the root by the Adani Group and they have in turn alleged that the report is nothing but a well-calculated move by a short-selling firm. Going one step further, Adani Group has also alleged that the attack on the Group companies is part of a well thought and planned attack on the ‘independence, integrity and quality of Indian institutions, and the growth story and ambition of India’. The market regulators SEBI and RBI had come out clarifying that they have confidence in the Indian economy and that there are strong regulations to promote and assure the required transparency and clarity in the financial statements. Many experts mention that the allegations and the discoveries mentioned in the report are mostly well-known news by the shareholders and the business analysts community as well as that the report has manipulated facts that directly result in windfall gains for the research firm but losses for the investors. Adani Group stocks though have seen a blood bath since the release of the report and have collectively lost approximately US$ 146 billion in market cap since the report was released.
After multiple trading sessions of hitting the lower circuit, 8 of the 10 listed Adani Group companies ended or closed in green giving much-needed relief to investors as well as the top man himself. The trading session on 28th February saw Adani Enterprises stock jump 14.22% to settle at Rs. 1,364.05 on the BSE and it rallied 19% during the day. Adani Ports shares saw an increase of 5.44%, Adani Green Energy, Adani Wilmar, NDTV, and Adani Power were locked in the upper circuit of 5% along with ACC, Ambuja Cement, and Adani ports gaining in the range of approximately 2% to 5%. The day's rally added about Rs. 30,000 crores to the market cap of the Adani Group bringing the group’s total market capitalisation an over Rs. 7.1 lakh crores. This rebound of stocks after multiple trading sessions is seen on the backdrop of the multiple loans prepaid by the conglomerate to boost investor confidence in their group companies. As per reports, Mr. Gautam Adani and the family have prepaid $1.11 billion worth of debt in a bid to calm a selloff. Furthermore, an Economic Times report also states that the group has received a firm commitment for a US $800 million debt facility. These funds will be utilised to refinance Adani Green Energy’s $750 million 4.375% bond due in September 2024. The group is also said to be in talks with a sovereign wealth fund for access to about US$ 3 billion to US$ 5 billion in the form of loans which is part of the highlights of the three-day roadshow in Singapore and Hong Kong. Adani Group has also committed to bondholders that it plans to repay and prepay share-backed loans to the tune of approximately US$ 690 million to US$ 790 million by the end of the month. These measures and strong actions coming from the group have acted in their favour and slowly but surely seem to regain investor faith.
SEBI had been looking into the allegations levelled by the Hindenburg report but has stated that so far it did not find anything out of the ordinary or evidence of wrongdoings. On the other hand, the honourable Supreme Court in its ruling on 2nd March 2023 ordered the setting up of a 6-member committee to look into various regulatory aspects for stock markets. This committee will be headed by former apex court judge AM Sapre. The order came after there were four PILs filed in the apex court on the Hindenburg report and the aftermath of the crash in stock prices of Adani Group companies. The court has further ordered the committee to submit its report within two months and asked the Centre along with financial statutory bodies and the SEBI Chairperson to render all cooperation to the panel. Mr. Gautam Adani has welcomed the Apex court order saying the ‘Truth will Prevail’ and that it will put an end to the long-standing speculations clearing the air around the allegations in a time-bound manner. The court's order was followed by all Adani Stocks trading in green and the flagship company of the group trading upwards by about 2%.
The allegations against the group created an uproar not only in Indian stock markets and the financial markets across the globe but also in the Parliament. While the storm seems to subside, the real aftermath left behind and its conclusion are yet to be seen. Watch this space for more details on the Adani Group and its performance. Let us know what you think of the report and the comeback by the Adani Group. Till Then Happy Reading!
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Marisha Bhatt is a financial content writer @TrueData.
She writes with the sole aim of simplifying complex financial concepts and jargon while attempting to clarify technical and fundamental analysis concepts of the stock markets. The ultimate goal is to spread vital knowledge and benefit the maximum audience. Her Chartered Accountant background acts as the knowledge base to help clarify crucial concepts and create a sound investment portfolio.
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