About four months after US short seller Hindenburg Research shook Indian financial markets with a bombshell report on the Adani Group, the conglomerate’s stocks are finding it hard to shake off the impact.
“Adani stocks have seen a readjustment of their valuations. The froth that existed prior to Hindenburg has gone away and won’t come back,” said Abhay Agarwal, founder and fund manager at Mumbai-based investment firm Piper Serica Advisors Ltd. “While investors are less concerned about governance issues at the group now than they were in the aftermath of the Hindenburg report, it is unlikely to erase all the losses over the next three, six or even 12 months.”
The Indian group has been one of the most high-profile targets for Nathan Anderson’s company, which has had a run of often-successful bets from electric-vehicle maker Nikola Corp. and Icahn Enterprises LP.
Adani has vigorously denied Hindenburg’s allegations and maintained it is fully compliant with disclosures required under local laws. The group didn’t respond to an email seeking comments for this story. Hindenburg also didn’t reply to emailed requests for comment by Bloomberg News.
On their part, the tycoon, his family and firms have been prepaying some debt, buying back some bonds and holding investor roadshows in a bid to restore confidence. In a report Monday, the group said its key debt metrics have improved.
Leading the rebound in the equity market are cash-generating businesses that have some of Adani group’s most lucrative assets.
Adani Ports & Special Economic Zone Ltd. — touted by market watchers as the conglomerate’s crown jewel — in late May became the first group stock to briefly erase all the losses since Hindenburg’s attack. All 21 sell-side analysts tracked by Bloomberg have a buy rating on the stock. Adani Power Ltd. is roughly 6% away from reclaiming lost ground. The company India’s largest private coal-based energy producer — saw its profit more than double in the year ended March.
Down more than 80% since Jan. 24, Adani Total Gas Ltd. has borne the brunt of the selloff in Adani shares. Flagship Adani Enterprises Ltd. is about 30% below its pre-Hindenburg level. On the debt side, Adani Ports’ note due in July 2024 is the only one among the group’s 15 dollar bonds to have recouped all losses, albeit briefly.
After campaigning against Adani, Hindenburg has bet against Jack Dorsey-led Block Inc. and Icahn Enterprises, which has billionaire Carl Icahn as its chairman. Shares of the latter plummeted 20% after Anderson’s firm took a short position — with losses extending to 56% as of June 2 close.
Investors in Adani stocks are awaiting the findings of a probe by India’s markets regulator into Hindenburg’s claims. The nation’s top court has asked for the investigation to be closed by Aug. 14. The regulator is also proposing to seek more disclosures from foreign funds with large holdings in local stocks or companies, following criticism about lack of oversight over inflows into sprawling conglomerates such as the Adani Group.
“We are certainly interested in investing further in Adani,” GQG Partners’ Jain told Bloomberg News in an interview last week. “But it depends on a lot of things, including pricing. Nothing is written on stone.”