Adani shares fall after Hindenburg Research bets against conglomerate

Shares in listed companies tied to India’s sprawling Adani Group fell after short seller Hindenburg Research released a report targeting the conglomerate controlled by billionaire business magnate Gautam Adani.

Shares in seven listed Adani group companies were down between 1 and 2 per cent in morning trading on Wednesday, with those in flagship business Adani Enterprises falling as much as 2.4 per cent.

Adani’s businesses are expanding rapidly. The self-made tycoon started as a commodity trader in the 1980s before ultimately building India’s largest private infrastructure group with around a dozen ports and eight airports. The group has multiple subsidiaries spanning sectors including data and defence.

Hindenburg said it had taken a short position on Adani Group companies “through U.S.-traded bonds and non-Indian-traded derivative instruments”. A spokesperson for Adani Group did not immediately respond to a request for comment.

The report comes as Adani, whose net worth of roughly $118bn ranks him as Asia’s richest person, according to Bloomberg, pushes forward with a fundraising drive to fuel the rapid expansion of both his existing industrial and fossil fuel outfits as well as green energy businesses.

The report from Hindenburg, published on Wednesday morning ahead of market open in Mumbai, asserts that “even if you ignore the findings of our investigation . . . [Adani Group’s] key listed companies have 85 per cent downside purely on a fundamental basis owing to sky-high valuations”.

The billionaire businessman has maintained that his companies’ valuations are justified.

Last year, Adani announced plans to increase the amount of freely-traded shares in Adani Enterprises after the company’s share price gained more than 3,300 per cent in three years.

The shareholdings by several Mauritius-based investment funds that have for years held stakes in Adani Enterprises and other listed Adani Group companies have come under scrutiny from Indian regulators in the past.

Analysts have raised concerns over the debt-fuelled growth of Adani Group, noting that the conglomerate’s total debts of almost Rs2tn (about $24bn) are equivalent to nearly seven times pre-adjusted earnings.

In December, the billionaire businessman told the Financial Times that some analysts “have not understood [his businesses] in real terms”.

“Who understands are my lenders, my banks, my global investors. Every time Adani comes into the market, they love to invest. And that’s how we are continuously growing.”

The Adani Group, which derives much of its revenues from mining and burning coal, has vowed to become one of the world’s largest green energy players by investing $70bn by 2030 in everything from green hydrogen to solar panel manufacturing.

Last year, Adani launched a hostile takeover of Indian broadcaster NDTV as the tycoon tries to build a media business.

Additional reporting by Benjamin Parkin, South Asia correspondent