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Hindenburg report on Adani Group is all about tall tales & zero substance: Here is why

Adani Group, which came into being merely 3-4 decades ago, has been growing from strength to strength and carving its growth across various segments, on back of competitiveness & harnessing human potential.

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New Delhi: Stock markets witnessed bloodbath on the Dalal Street towards the end of week, with last two trading sessions witnessing shares in a free-fall, specifically stocks of Adani Group companies plummeting to lows of almost 20%.

The turbulence & turmoil in the stock markets came on back of sensational charges against Adani Group by US-based firm named Hindenburg Research. Both retail & institutional investors suffered mounting losses in last 2 days.
Hindenburg claimed that it has bought short positions in Adani Group company’s stocks, implicating that any posturing by it can result in wide-ranging impact for the India’s riches conglomerate as well as its investors. It also accused Adani Group of ‘indulging in brazen stock manipulation & accounting fraud over a couple of decades.’ The US-based firm said that its findings were outcome of two-year investigation and inputs from many ‘credible’ sources.

Adani set to sue Hindenburg

Adani Group was quick to issue point by point rebuttal to its ‘ambiguous & unsubstantiated’ charges and said that the seer intention behind this ‘malafide & mischievous’ report was to hurt the company’s Rs 20,000 crore Follow on Public offer (FPO). The company is also set to sue the US-based short seller in lawsuit.

Hindenburg’s own credentials ‘shaky’

Hindenburg claims that it did due diligence at many company’s sites & reviewed many documents before preparing ‘damning’ report. But, the reality is that the company resorted to mostly news coverage & Adani Group’s disclosures and made a deliberate attempt to omit the ‘positives’ and pick the ‘negatives’ in preparing a list of 88 questionaires.
Many top officials in Adani group believe that the report was nothing but a calibrated & well co-ordinated effort to discredit the company’s financials & derail its ‘victory march’. Remember, Adani Group has seen exponential growth in recent past and its owner Gautam Adani surpassed behemoth organizations & its CEOs globally, to become World’s 4th richest person.

Adani - Hindeburg

What gives credence to this belief is Hindenburg’s own credentials & reputation. The US based is too small a firm to rate colossal company like Adani Group. It is neither a credit rating agency nor an international lender. It is merely a short seller and hence its findings & conclusions do deserve careful assessment & scrutiny.

Adani Group’s robust financials & investors’ confidence

Adani Group, which came into being merely 3-4 decades ago, has been growing from strength to strength and carving its growth across various segments, on back of competitiveness & harnessing human potential. The company’s businesses are not limited to the country alone but has its mining operations spread to many countries across the globe.

The company’s many businesses germinated under Gautam Adani and also flourished under his stewardship. The first-generation businessman, adhering to highest standards & benchmarks of entrepreneurship bagged contracts via auctions and created a sprawling business empire, ranging from electricity supply to city gas distribution, port development & many more. Even today, the business tycoon is a strong votary of transparency & competition in business biddings & dealings.

Interestingly, post the shake-up in markets, a couple of bankers have expressed confidence in the group. According to a daily’s report, many bankers have admitted that company’s borrowings are secured by its assets and also, it has requisite cash flows to service its loans.

According to CLSA report, top 5 companies of Adani Group have a total debt of Rs 2.1 lakh crore and out of this, just 40% of its debt are linked with Indian banks, 30% with govt & 10% with private lenders. According to Independent analysts, Adani Group’s debt exposure to public sector banks remains limited to only about 1/4th of its total borrowings.

Owing to Adani Group’s global appeal & credible status, many international financial institutions like Deutsche Bank, BNP Paribas, ING, UBS, Credit Suisse, Rabobank, Siemens and Barclays have offered lending to it. Interestingly, world giants such as JP Morgan, Citi, and Bank of America from the US are also given cheques to Adani group companies for various projects.

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Why Hindenburg report doesn’t inspire confidence?

Hindenburg, in its 100-page report, has touched upon Vinod Adani more than hundred times and developed its own theories based on his ‘elusiveness’.

Vinod Adani is Gautam Adani’s elder brother and is a non-resident Indian for many decades. Trying to establish some partisan & tilted opinion by mentioning his name multiple times only gives an impression that it is concocted report.

Adani Group in its recent statement reiterated about people’s confidence & faith in its companies. Given the ‘motivated & agenda driven research’ by US-based short-seller, the report will more or soon fizzle out from public domain. It will also make people do their own deliberations on whether to believe in — a company invested in the business for a long term or a short-seller like Hindenburg.

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