Three years of Hindenburg report that shook Adani group firms' mcap

Three years after Hindenburg's report wiped out ₹16 trillion in value, Adani Group has seen a sharp recovery-and a fresh sell-off amid renewed global scrutiny

The scathing report by US-based short seller Hindenburg Research on January 24, 2023, marked one of the most disruptive episodes for the Gautam Adani Group, erasing over ₹16 trillion from the conglomerate’s market capitalisation (mcap) and triggering a regulatory, political, and investor scrutiny. 

The combined mcap of listed Adani companies stood at a record ₹23 trillion on September 20, 2022. However, it plunged to a low of ₹6.82 trillion on February 27, 2023, following Hindenburg’s allegations of accounting irregularities, excessive leverage, and opaque offshore ownership structures. The group stocks faced relentless selling, margin calls, and index rebalancing pressures.

 

A recovery followed over the next year, driven by a mix of improvement in operational performance, backing from global investors, and a reduction in leverage. 

Promoters infused fresh equity, while marquee global investors, including GQG Partners, took sizeable stakes, providing credibility at a crucial juncture.

 

Also, the Supreme Court-appointed expert committee found no conclusive evidence of regulatory failure, easing fears of systemic wrongdoing. Subsequently, market regulator Sebi also gave the group a clean chit in two key matters involving alleged violations of related-party transaction (RPT) norms and insider trading.

 

Strong cash flows from core businesses such as ports, airports, power transmission, and renewables further helped stabilise sentiment. By June 3, 2024, the group’s mcap had recovered to around ₹19.43 trillion.

 

However, the rally has since lost momentum, with the group’s valuation sliding about 35 per cent to ₹12.7 trillion.

 

The renewed decline reflects a combination of factors, including profit-taking after a sharp rebound, persistent concerns over leverage, and heightened sensitivity to global riskoff sentiment.

 

The latest trigger for the selloff came on Friday, after the US market regulator, the SEC, moved to seek court permission to personally email summons to founder Gautam Adani and his nephew Sagar Adani over an alleged fraud and bribery scheme.