Following the scathing Hindenburg Research report on the Adani Group, the Indian conglomerate issued a 413-page response. But as Hindenburg responded to the response, founder Gautam Adani had already lost $27.9 billion in personal net worth, and his group of companies shed $48B last week amid a selloff following the report.

The Fallout from the Hindenburg Research Report on Adani Group

Last Tuesday, January 24th, Hindenburg Research labeled India’s Adani Group as the largest con in corporate history. As noted in that coverage, the financial forensics company delivered a 2-year investigative report on Adani Group, India’s largest infrastructure conglomerate that covers everything from defense and agriculture to coal mining, logistics, and financial services.

Hindenburg’s report claimed that the group used a “labyrinth of offshore shell entities” to over-value stocks of Adani’s top companies in the infrastructure sector, such as Adani Enterprises, Adani Power, Adani Total Gas, and others. The report also exposed accounting irregularities, lack of financial controls, and the Adani family’s nepotism.

But even without those points, the report painted a bleak picture of Adani’s financials as the group’s debt annually jumped by 40% to $27 billion in March 2022. Predictably, since the report was released, top Adani Group companies’ stocks have fallen sharply. On a monthly basis, Adani Enterprises (ADANIENT) alone lost -25% of its value.

Adani Group representative, CFO Jugeshinder Singh, painted the report as a “malicious combination of selective misinformation,” insinuating that its goal was to sabotage last Friday’s follow-on public offering (FPO) for Adani Enterprises. Worth $2.5 billion of extra issued shares, this was India’s largest FPO to date.

In the aftermath, the FPO stock sale for Adani Enterprises was overshadowed by the company’s $48 billion devaluation since the report came into the public spotlight. During the same period, the chairman and founder of the Adani Group, Gautam Adani, lost $27.9 billion. Previously ranked as the world’s 4th richest man, under Elon Musk and Jeff Bezos, he is now 7th at $92.7 billion total net worth.

The Battle for Adani Group Reputation Continues

Adani Group’s companies have been India’s biggest growth success stories. Even with the present devaluation spree, if one had invested in Adani Enterprises (ADANIENT) in August 2019, the return on investment (RoI) would now be over +2,000%. Likewise for Adani Green (+2,300%) and Adani Total Gas (+1,350%).

It is no surprise that Adani Group would want to patch up the eroded public confidence. Within four days after the Hindenburg report, which took two years to make and filled 106 pages, Adani Group crafted a 413-page response. Keeping up with the accelerated timetable, Hindenburg responded to that report within 9 hours.

Adani Group attempted to refute the Hindenburg report by heavily emphasizing Indian nationalism.

“This is not merely an unwarranted attack on any specific company but a calculated attack on India, the independence, integrity and quality of Indian institutions, and the growth story and ambition of India,”

In a pre-emptive move, Hindenburg Research included 88 specific questions in their original Adani Group report. This gave them a response metric, now claiming in their response to Adani’s response that “Adani failed to specifically answer 62 of our 88 questions”. As for the rest of the answers, Hindenburg sees them as “generalized deflections,” with only 30 pages out of 413 having relevant responses.

Case in point, when asking what the source of billions of dollars coming from Vinod Adani’s (brother of Gautam) offshore shell entity is, Adani responded that “we are neither aware nor required to be aware of their ‘source of funds’.” This line of reasoning continues to other allegations, which Hindenburg says “simply defy common sense.”

Regarding an alleged Hindenburg attack on India as a nation, Hindenburg struck with a retort that the Adani Group is holding India back by having “draped itself in the Indian flag while systematically looting the nation.”

Given the nature of the response to Hindenburg, Adani Group is counting on nationalistic sentiment to ensure that investors double down and prevent further devaluation of Adani Group’s holdings. After all, it is doubtful that most retail investors would read up on multi-hundred-page reports on either side of the equation.

This article originally appeared on The Tokenist

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