Adani In Numbers: How 1 Controversial Report Dented Rs 19 Trillion Empire Of Indian Conglomerate

While giants like Apple and Amazon were founded in garages, Google as a research project, the foundation of Adani Group laid behind only one name, Gautam Adani. From college dropout to working as a diamond trader, the journey to build a port-to-energy empire was not an easy task, Mr Gautam too faced his own ups and downs. But the year 2020, right after when the world was brought to a standstill by the deadly Coronavirus, the Indian conglomerate was on a success ramp. But all it took was only one controversial research report by a US-based short seller to wipe out $150 billion of wealth of investors in a heartbeat.

Between 2020 to 2022, headlines hit, Adani stocks are at sky-high levels, defying all the macro uncertainties like the pandemic, followed by supply-chain gloom, geopolitical risks of Russia-Ukraine, inflationary pressure and a challenging environment.

And then there was Gautam Adani riding on the bulls and earning the title of the richest man in his country. He sure did surpass Mukesh Ambani who enjoyed the same crown for many years. Mr Gautam wasn't just India's richest man, he was also the world's third-richest businessman.

By mid-September 2022, Gautam Adani's net worth had bloomed to a record $147 billion, as per the Bloomberg Billionaire Index.

Eyes watched Adani entities soar to new heights! But before even the short seller's report could shake the ground beneath Adani firms, there were already few hiccups in the Group's balance sheet in the form of its debt toll, but that wasnt something of panic for investors to dump these shares in a flash. Shockingly, that changed, after New York-based Hindenburg released a research report on January 24, 2023.

The words of Hindenburg's research report read something like "The Rs 17.8 trillion (U.S. $218 billion) Indian conglomerate Adani Group has engaged in a brazen stock manipulation and accounting fraud scheme over the course of decades."

Hindenburg accused Gautam Adani, Founder and Chairman of the Adani Group of amassing a net worth of roughly $120 billion, adding over $100 billion in the past 3 years largely through stock price, appreciation in the group's 7 key listed companies, which have spiked an average of 819% in that period. It was the same years from 2020 to 2022 when Adani shares were flying high.

Adani Group denied the accusations but could not escape the radar of Indian regulators. The Adani-Hindenburg matter is one of the most watched cases at the Supreme Court this year. In the latest development, the Chief Justice of India (CJI) DY Chandrachud on Monday asked all parties in the Adani-Hindenburg case to file final submissions by November 8, 2023. The case is still ongoing.

Even though Adani shares have recovered significantly since March 2023, there is still a long way for them to reach the levels before Hindenburg's scandalous report. Gautam Adani's billions of dollars of net worth is still down by half since the Hindenburg saga began.

Let's find out the aftermath of Hindenburg's report in Adani Group in numbers:

The majority of Gautam Adani's fortune is derived from his Group's seven listed entities. These are flagship firms Adani Enterprises, Adani Ports, Adani Power, Adani Energy Solutions formerly known as Adani Transmission, Adani Total Gas, Adani Energy and Adani Wilmar.

As per the Bloomberg Index, each of the companies is publicly traded and based in Ahmedabad, India. The shares are held by a group of individuals and entities - so-called promoter groups - that ultimately flow up to the Adani family's trust. They are credited to Gautam Adani to reflect his status as founder. Also, the Adani family has businesses encompassing billions of dollars of assets and liabilities in a network of closely held companies that in many cases ultimately are controlled by the family trust or by Gautam's older brother, Vinod Adani.

Apart from this, Adani has also picked up majority shares in media company, NDTV, and cement biggies like Ambuja Cements and ACC. Acquisition of Ambuja and ACC got Adani on the map of cement segments by becoming the second largest cement player after Ultratech Cement.

Since Hindenburg's report, Adani's seven major shares have taken a huge setback. His wealth is still down by over 60 billion dollars year-to-date.

As per the Bloomberg Billionaires Index, Gautam Adani's wealth is down by $60.5 billion so far in 2023, totalling $60.1 billion. This wasn't the case before the Hindenburg report as Mr Gautam set on a mountain of $120 billion in wealth by the end of January 23, 2023. Right after the short seller's alleged report, Gautam's wealth dropped by $7 billion to $113 billion by January 25, and further south to $92.7 billion by January 27th. This would be a drop of mind-boggling $27.3 billion in a matter of 3 days from January 24th to 27th.

But that was just the beginning, Gautam Adani was in for an unstable roller coaster ride. Since January 24th, his wealth continued to decline like a freefall, from $72.1 billion as of February 1, 2023, to $37.7 billion by February 27th. This would be an erosion of a massive $82.3 billion in his wealth in just 35 days.

However, when March arrived, Adani stocks gained momentum as key foreign investors carried huge block deals including a Rs 38,700 crore investment by GQG Partners in tranches. Other foreign investors like Kempas Trade and Investment, Qatar Investment Authority, and International Holding Company, among others have also pumped in funds in Adani shares during first six months of FY24.

Nevertheless, even after nine months since the Hindenburg report, Adani shares have witnessed a huge drop in year-to-date performance. Some of the companies have also recorded heavy losses in Q2FY24 especially Adani's first born Adani Enterprises.

Here's how Adani shares have performed from January 24th to November 6th, and their Q2 earnings:

Adani Enterprises:

On Monday, AEL shares gained by 0.8% to end at Rs 2,246.30 apiece on BSE with a m-cap of Rs 2,56,078.45 crore. But the shares are down by 35% since January 24th where they were at Rs 3,442.75 apiece.

The Group's flagship company posted a consolidated net profit of Rs 267.20 crore in Q2FY24, lower by 55.12% from PAT of Rs 595.46 crore in Q2FY23. Although, Q2 PAT was better compared to a loss of Rs 35.52 crore in Q1FY24. However, the top-line front was in red with revenue declining to Rs 22.517 33 crore in Q2FY24 as against Rs 38,175.23 crore in Q2FY23 and Rs 25.438.45 crore in Q1FY24.

Adani Green Energy:

Adani Green's share price rallied by 2.6% to settle at Rs 925.55 apiece on BSE with an m-cap of Rs 1,46,610.13 crore. However, the shares are down by 52% from the January 24th level of Rs 1,913.55 apiece.

Unlike the flagship company, Adani Green posted a net profit of Rs 372 crore in Q2FY23, higher than Rs 197 crore in Q2FY23. Revenue also picked up year-on-year to Rs 1,984 crore in Q2FY24 as against Rs 1,105 crore a year ago same period. Sequentially, the earnings were mixed compared to Q1FY24 where PAT stood at Rs 322 crore, and revenue at Rs 2,045 crore.

Adani Total Gas:

Adani Total Gas became the first Adani stock to drop by over 85% which Hindenburg had predicted. In its report of January 24th, Hindenburg had said, "On a blended basis, compared to industry peers, we see 85%+ downside purely on fundamentals."

On BSE, Adani Total Gas shares are down by 0.41% to end at Rs 551.05 apiece on Monday with m-cap of Rs 60,605.03 crore. But the share price is down by nearly 86% compared to the day, Hindenburg released its report. On January 24th, Adani Total Gas was the most expensive Adani shares per piece at Rs 3,885.45 followed by Adani Enterprises.

Adani's oil and gas company has witnessed a steady bottom-line front in Q2FY24 where PAT came in at Rs 172.68 crore, rising from Rs 160.02 crore in Q2FY23 and Rs 150,22 crore in Q1FY24. However, revenue was mixed, coming at Rs 1,178.77 crore in Q2FY24, higher from Rs 1,135.35 crore in Q1FY24 but lower from Rs 1,190.37 crore in Q2FY23.

Adani Energy Solutions:

From January 24th level, Adani Energy is down by 72%, the second Adani stock which is nearing Hindeburg's 85% warning. On Monday, Adani Energy shares ended at Rs 771.25 apiece, up by 0.80% with an m-cap of Rs 86,032.37 crore.

The company earned a net profit of Rs 275.88 crore in Q2FY24, registering a growth of 57.6% from Rs 175.06 crore in the preceding quarter. Year-on-year, the Q2 PAT was up by 33.81%. Consolidated revenue from generation, transmission and distribution business stood at Rs 3,497 crore in Q2FY24, rising from Rs 3,032.07 crore in Q2 of the previous fiscal, however, was lower from Rs 3,663.90 crore in Q1FY24.

Adani Ports:

Adani Ports is the second Adani stock to have shrugged off the impact of Hindeburg's report. The stock has gained by at least 5.5% since January 24th when it stood at Rs 760.85 apiece. On November 6th, Adani Ports' share price ended at Rs 802.40 apiece, up by 0.9% on BSE with an m-cap of Rs 1,73,329.55 crore.

The company will announce its Q2 results on November 9th.

Adani Power:

But it would be Adani Power who rather than succumbing to the extreme selling pressure in its siblings, instead has given exponential returns since Hindeburg's report. On November 6th, Adani Power's shares ended at Rs 393.70 apiece, up by 2.4% on BSE with m-cap is Rs 1,51,847.69 crore. The stock is currently trading higher by 43.3% from January 24th when the stock was at just Rs 274.8 apiece.

Adani Power, the cash cow of the group currently, reported robust year-on-year growth with PAT at Rs 6,594.17 crore in Q2FY24, registering multifold growth from PAT of Rs 695.53 crore in Q2FY23. However, sequentially, PAT declined from Rs 8,759.42 crore in Q1FY24. Nevertheless, revenue witnessed strong growth at Rs 12,990.58 crore in Q2FY24 versus Rs 7,043.77 crore in Q2FY23 and Rs 11,005.54 crore in Q1FY24.

Adani Wilmar:

On the November 6th trade, Adani Wilmar shares were under pressure, falling by 1.72% to end at Rs 312 apiece with an m-cap of Rs 40,549.97 crore on BSE, after reports stated that Gautam Adani's Group is likely to sell the entire stake in the company.

Due to sharp selling, Adani Wilmar is currently down by 45.6% from the January 24th level of Rs 573.15 apiece.

In Q2FY24, the company's net loss doubled to Rs 130.23 crore compared to a loss of Rs 59.71 crore in Q1FY24. Consolidated revenue from operations has also taken a hit in Adani Wilmar to Rs 12,267.15 crore in Q2FY24, down from Rs 14,150.03 crore in Q2FY23 and Rs 12,928.08 crore.

Together, these seven stocks of Adani have a market value of over Rs 9.15 lakh crore as of November 6th, which is still lower by Rs 10 lakh crore or about 48% of the valuation of Rs 19.2 lakh crore seen on January 24th. Gautam Adani is currently 21st richest man in the world.