Hindenburg shorts India’s Adani Group, cites debt, accounting concerns

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BENGALURU — Hindenburg Analysis mentioned on Wednesday it held quick positions in Adani Group, accusing the Indian conglomerate of improper intensive use of entities arrange in offshore tax havens and expressing concern about excessive debt ranges.

The group, which is led by Gautam Adani, the world’s third richest man in keeping with Forbes, dismissed the U.S. short-seller’s claims as baseless.

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The report, which comes days forward of a $2.5 billion share providing by flagship agency Adani Enterprises, sparked sharp falls in shares of Adani group corporations.

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Hindenburg, which has quick positions in Adani firms by means of U.S.-traded bonds and non-Indian-traded spinoff devices, mentioned key listed firms within the group had “substantial debt” which has put your complete group on a “precarious monetary footing.”

It additionally mentioned that seven Adani listed firms have an 85% draw back on a basic foundation as a result of what it referred to as “sky-high valuations.”

Adani Group’s Chief Monetary Officer, Jugeshinder Singh, mentioned in an announcement that the corporate was shocked by the report, calling it a “malicious mixture of selective misinformation and rancid, baseless and discredited allegations.”

“The timing of the report’s publication clearly betrays a brazen, mala fide intention to undermine the Adani Group’s fame with the principal goal of damaging the upcoming follow-on Public Providing from Adani Enterprises,” it added.

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“The Group has at all times been in compliance with all legal guidelines.”

Hindenburg mentioned its report was based mostly on an investigation over two years that concerned talking with dozens of people, together with former Adani Group executives in addition to a overview of paperwork.

India’s capital markets regulator, the Securities and Trade Board of India, didn’t instantly reply to a request for remark.

Adani has repeatedly dismissed debt considerations. Singh informed media on Jan. 21 “No one has raised debt considerations to us. No single investor has.”

Within the wake of the Hindenburg report, shares in Adani Ports And Particular Financial Zone fell 7.3% to their lowest degree since early July. Adani Enterprises dropped 3.7% to a close to three-month low.

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Adani-owned cement corporations ACC and Ambuja Cements , which it acquired from Switzerland’s Holcim final yr in a $10.5 billion deal, fell 7.2% and 9.7% respectively on Wednesday.

Hindenburg’s report mentioned that 5 of seven key listed Adani firms have reported present ratios – a measure of liquid property minus near-term liabilities – under 1. This, the short-seller mentioned, instructed “a heightened short-term liquidity threat.”

Adani Group’s whole gross debt within the monetary yr ending March 31, 2022, rose 40% to 2.2 trillion rupees.

Refinitiv information reveals that debt at Adani Group’s seven key listed Adani firms exceeds fairness, with debt at Adani Inexperienced Power Ltd exceeding fairness by greater than 2,000%.

CreditSights, a part of the Fitch Group, described the group final September as “overleveraged” and mentioned it had considerations about its debt. Whereas the report later corrected some calculation errors, CreditSights mentioned it maintained its considerations about Adani’s leverage.

Hindenburg is understood for shorting electrical truck maker Nikola Corp and Twitter although it later reversed its place in Twitter.

Shares in Adani Enterprises surged 125% in 2022, whereas different group firms, together with energy and fuel items, rose greater than 100%.

(Reporting by Chris Thomas, Aditya Kalra and Mrinmay Dey; Extra reporting by Miyoung Kim; Modifying by Edwina Gibbs)

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