Adani Enterprises Bounces Back, Erasing Stock Losses Triggered by Hindenburg Report

In January 2023, US-based Hindenburg Research released a report accusing the Adani group of extensive corporate malpractice and share-price manipulation.

Adani Enterprises Ltd., the flagship company of Indian billionaire Gautam Adani’s conglomerate, has fully rebounded from the substantial losses it suffered following a damaging short-seller report in early 2023. This recovery is attributed to the group’s efforts in reducing its debt and securing significant new projects.

In January 2023, US-based Hindenburg Research released a report accusing the Adani group of extensive corporate malpractice and share-price manipulation. These allegations led to a sharp decline in Adani Enterprises’ stock, wiping out over $30 billion in market value. The Adani group has consistently denied all allegations made in the report.

On Friday, shares of Adani Enterprises rose by 1.7% to ₹3,445.05 in Mumbai, nearly tripling from their lowest point in February 2023. Analysts suggest that the recent increase is partly driven by expectations that Adani Enterprises’ stock might be included in the S&P BSE Sensex Index in June, which could attract more passive investments.

Other companies within the Adani group are also making strides by engaging with global investors to raise new debt, aiming to expand their cement and copper businesses. Notably, at least five of the ten listed Adani group stocks are now trading above the levels they were at before the Hindenburg report was released.

The broader recovery of Adani stocks began in March 2023 when Rajiv Jain’s GQG Partners, a prominent emerging-market investor, purchased shares worth nearly $2 billion in four of the group’s firms, including Adani Enterprises. This significant investment came from an Adani family trust and was followed by additional investments throughout the year. Further confidence in the group was shown by investments from the Qatar Investment Authority and UAE-based International Holding Co.

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“There are a handful of groups in India that can undertake big projects, and the Adani Group has taken the leadership position,” said Abhay Agarwal, a fund manager with Mumbai-based Piper Serica Advisors Pvt. “Investors are viewing the Adani group as aligned with national policy directions, which is driving the recovery.”

Among the group’s companies, shares of Adani Ports and Special Economic Zone Ltd. and Adani Power Ltd. have performed exceptionally well, each gaining over 35% this year. In contrast, New Delhi Television Ltd. (NDTV) has been the biggest laggard, with its shares declining by 5.5%.

The fallout from the Hindenburg report led Adani Enterprises to scrap a $2.4 billion equity offering, which was set to be India’s largest follow-on share sale. This setback also triggered regulatory probes in India and significantly impacted Gautam Adani’s personal wealth. Despite these challenges, the group is now less than $30 billion away from regaining its market value from before the report’s release.

The recovery of Adani Enterprises highlights the group’s resilience and strategic maneuvering in the face of adversity. As the company continues to expand its projects and attract significant investments, it remains a key player in India’s economic landscape.

With the anticipation of Adani Enterprises being included in the S&P BSE Sensex Index, the group’s market presence is expected to strengthen further, potentially bringing in more investments and solidifying its position as a major conglomerate in India.