Market analysts have predicted a bearish outlook for the Adani Group shares.
Shares of Adani Group companies have lost more than ₹2.8 lakh crores in two trading sessions amid a massive sell-off triggered by US activist firm Hindenberg Research report that accused the group of pulling “the largest con in corporate history”.
The net worth of group founder and chairman Gautam Adani has plunged by more than USD20 billion since the publication of the research report on January 24.
The equity market was closed on Thursday on account of Republic Day.
Seven Adani Group companies lost ₹2.83 lakh crores of market capitalization as of 1 pm on Friday, according to market analysts.
Stocks of five of group companies – Adani Enterprises, Adani Ports & SEZ, Adani Total Gas, Adani Green Energy, and Adani Transmission – hit lower circuits during the trading session on Friday. These companies registered a free fall of around 20 per cent in a single day.
According to reports, Adani Total Gas suffered the highest losses at ₹79,788 crores, followed by Adani Green Energy at ₹57,876 crores, and Adani Transmission whose stocks lost ₹52,531.90 crores in valuation.
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Market analysts have predicted a bearish outlook for the Adani Group’s share basket.
The panic sell-off pulled down the indices by around 1.5 per cent. While Nifty plunged by nearly 290 points to 17,600, Sensex slid by around 870 points to settle at 59,330.
In a lengthy report, the New York-based Hindenburg Research alleged the Adani Group, headed by the world’s third-richest person Gautam Adani, was involved in stock manipulation and improper use of offshore tax havens.
“Key listed Adani companies have also taken on substantial debt, including pledging shares of their inflated stock for loans, putting the entire group on precarious financial footing,” the firm said.
The report, which the research company said was published after a 2-year investigation, said five of seven key listed companies of Adani Group have reported ‘current ratios’ below 1, indicating near-term liquidity pressure.
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Shares of Adani Group companies – currently valued at ₹17.8 trillion – spiked an average of 819 per cent in the last three years, it said, adding that the group founder and chairman Gautam Adani amassed USD100 billion of USD120 billion of his net worth in that period.
“Our research involved speaking with dozens of individuals, including former senior executives of the Adani Group, reviewing thousands of documents, and conducting diligence site visits in almost half a dozen countries,” the research firm said.
The Hindenburg Research report further claimed that key listed companies of the Adani Group have taken on “substantial debt, including pledging shares of their inflated stock for loans, putting the entire group on precarious financial footing”.
Adani Group’s very top ranks and 8 of 22 key leaders are Adani family members, a dynamic that places control of the group’s financials and key decisions in the hands of a few, it said that a former group executive dubbed the conglomerate as “a family business.”