Billionaire Gautam Adani-backed port-to-power empire crumbled on August 12 on stock exchanges, with nearly Rs 1.29 lakh crore of investors' wealth wiped out in less than one hour since the opening bell of Monday. All Adani Group stocks are trapped in free fall, with downside ranging from 2.4% to 17%. The panic frenzy can be attributed to fresh claims of Hindenburg against Adani, with allegations also on market regulator Sebi and its chief.
Adani Stocks On August 12:
Flagship company, Adani Enterprises' stock nosedived by 5.44%, followed by a nearly 5% decline in Adani Ports share. At the same time, Meanwhile, Adani Green and Adani Power dropped by 10.95% and 6.97% respectively in the early trade. These four are Adani Group's most valued companies in terms of market share.
Further, taking into consideration the day's intraday low, Adani Energy Solutions was the worst hit with a downfall of 17.06%, while Adani Total Gas followed closely with a decline of 13.4%. Also, Adani Wilmar, the FMCG stock, dived by nearly 6.5%.
Adani's media stock NDTV also faced heavy selling pressure, declining by 11.04%. Meanwhile, cement stocks such as Ambuja Cements and ACC were the only two stocks that faced a slower pace of decline by 2.5% and 2.4% respectively.
Adani Group Market Cap:
Adani Enterprises' market cap dipped by Rs 19,726.9 crore in the early trade, while the most decline was seen in Adani Power whose m-cap plunged by Rs 29,329.7 crore and Adani Energy Solutions whose m-cap also dipped by Rs 22,627.29 crore.
All, Adani company's market cap significantly contracted. Adani Port's m-cap was down by Rs 16,395 crore, and Adani Total Gas shed Rs 12,849 crore m-cap. While Adani Wilmar's market cap declined by Rs 3,244 crore, Ambuja Cements' m-cap was down by Rs 3,940 crore, and ACC's m-cap slipped by Rs 1,068 crore. Lastly, NDTV's m-cap was lower by Rs 149 crore.
Together, Adani Group's stock market cap declined by Rs 1,28,954.01 crore on August 12. Due to the latest bloodbath, Adani Group's cumulative market cap stood around Rs 15.95 lakh as of August 12.
By the end of August 9, the market cap of Adani Group companies cumulatively stood at over Rs 17.24 lakh crore.
Why Adani Stocks Are Free Falling On August 12?
The tone of Adani stocks turned extremely bearish Hindenburg dropped yet another bombshell report against the conglomerate and Sebi.
This time the US short seller is taking a jibe at Sebi and their relationship with Adani companies.
In its latest report, Hindenburg said, "It has been nearly 18 months since our original report on the Adani Group presented overwhelming evidence that the Indian conglomerate was operating "the largest con in corporate history". Our report exposed a web of offshore, primarily Mauritius-based shell entities used for suspected billions of dollars of undisclosed related party transactions, undisclosed investment and stock manipulation."
At the latest, Hindenburg is claiming that IPE Plus Fund is a small offshore Mauritius fund set up by Adani Director via India Infoline, a wealth management firm with ties to the wire-card scandal.
It said, "A subsequent investigation by non-profit project Adani Watch in December 2023 showed how a web of offshore entities, controlled by Gautam Adani's brother, Vinod Adani, were recipients of funds from the alleged over-invoicing of power equipment."
Further, Hindenburg said, in "one complex structure, a Vinod Adani controlled company had invested in "Global Dynamic Opportunities Fund" ("GDOF") in Bermuda, a British overseas territory and tax haven, which then invested in IPE Plus Fund 1, a fund registered in Mauritius, another tax haven."
Not just that Hindenburg roped in Sebi's chief Madhabi Buch and her husband and alleged that they both hold stakes in obscure offshore funds used in the Adani money siphoning scandal.
In brief, Hindenburg claimed by saying, "Despite the existence of thousands of mainstream, reputable onshore Indian mutual fund products, an industry she now is responsible for regulating, documents show SEBI Chairperson Madhabi Buch and her husband had stakes in a multi-layered offshore fund structure with minuscule assets, traversing known high-risk jurisdictions, overseen by a company with reported ties to the Wirecard scandal, in the same entity run by an Adani director and significantly used by Vinod Adani in the alleged Adani cash siphoning scandal."
Both Adani Group and Sebi have responded to the new allegations of Hindenburg.
Adani Enterprises on August 11 said, "The latest allegations by Hindenburg are malicious, mischievous and manipulative selections of publicly available information to arrive at pre-determined conclusions for personal profiteering with wanton disregard for facts and the law. We completely reject these allegations against the Adani Group which are a recycling of discredited claims that have been thoroughly investigated, proven to be baseless and already dismissed by the Hon'ble Supreme Court in March 2023."
Sebi said, "Investors should remain calm and exercise due diligence before reacting to such reports. Investors may also like to take note of the disclaimer in the report that states that readers should assume that Hindenburg Research may have short positions in the securities covered in the report."
The market regulator added, "SEBI, over the years, has built a robust regulatory framework that not only aligns with best global practices but also ensures the protection of investors."
When will the latest Hindenburg shock fade?
Dr V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services said, "There is the Hindenburg report and its likely fallout. It appears that this "revelation" is unlikely to impact the market meaningfully. The buy on dips strategy which has been working well in this bull run is likely to work again."
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