A short seller's report, in just over a week-and-a-half, has erased over a hundred billion dollars in value from one of India's largest companies.
The Adani Group, an Indian conglomerate with interests in ports, commodities and energy, has lost $118 billion in value—a 50% decline—since Jan. 24, when short seller Hindenburg Research accused the company of stock manipulation, fraud and poor governance.
The Adani Group entered 2023 on a high-note, following a surge in share prices in the latter half of 2022. Shares in Adani companies rose by up to 300% over 2022, as investors bet that the Group’s business activities aligned with the policy agenda of Indian prime minister Narendra Modi.
But in the 10 days since the report, Adani stocks have been in free fall. Shares in commodity trader Adani Enterprises, the Group’s flagship company, were worth $41.96 the day before Hindenburg’s report was released.
As of market close on Feb. 3, Adani Enterprises shares are now trading at $19.38, a 53.8% decline. Other Adani Group companies, like Adani Transmission and Adani Green Energy, have also halved in price since the report's release.
The fall in share prices was so steep that the company embarrassingly pulled a $2.5 billion share sale at the last minute, despite it being fully subscribed. When it announced the cancellation on Wednesday, Adani Enterprises said that going ahead with the sale would not be “morally correct” given the changes in share price.
The financial world is now taking a closer look at the Adani Group. Citigroup stopped accepting Adani securities as collateral for loans this week, according to Bloomberg. And on Friday, S&P said it would remove Adani Enterprises from the Dow Jones Sustainability Index, effective this week.
Here’s how the release of Hindenburg's report affected the share price of Adani Enterprises, the Adani Group's flagship company.
The stock rout has also sunk the fortunes of the Adani Group's chairman, Gautam Adani.
When the year began, Adani was the world’s third-richest man with a net worth of $121 billion, behind LVMH CEO Bernard Arnault and Tesla CEO Elon Musk, according to the Bloomberg Billionaires Index. As of Feb. 2, Adani is now in twenty-first place, with a fortune of $61.3 billion, around half of what it was at the beginning of the year.
Adani has also lost his title as the world’s richest Asian person, falling behind both Reliance Industries chairman Mukesh Ambani and Nongfu Spring founder Zhong Shanshan.
