Month after Hindenburg’s bombshell report, Adani stocks in shambles; group loses over ₹12 lakh cr m-cap

A month after Hindeburg's bombshell report, Adani Group has lost over ₹12 lakh crore market value on Friday. From the peak level, the losses are even heftier. On January 24, 2023, the Adani Group held the alpha seat on stock exchanges with a market valuation of over ₹19 lakh crore, outrunning Mukesh Ambani's Reliance and Ratan Tata's TCS. The Gautam Adani-backed conglomerate was the star and everyone wanted a taste of it. But the same day, the US-based short seller Hindeburg's bombshell report sparked a wildfire for Adani stocks.

Adani's shares are in shambles a month after the short seller's critical report. In a month, Adani has seen it all, from the good old days to enter a phase of eye-blotching losses. Majority of Adani stocks have hit back-to-back lower circuits or fresh 1-year lows.

By end of market hours on Friday, the m-cap of Adani securities was around ₹7,15,986.97 crore on BSE. This would be a loss of over ₹12 lakh crore from a market valuation of around ₹19.2 lakh crore which was seen on January 24.

Earlier this week, Rohan Shah-head technical analyst at Stoxbox said, Adani group's market capitalisation is now down 70% from its peak.

As per Shah, the peak level of Adani Group's market cap was around ₹25 lakh crore.

From this level, Adani shares market value has dipped by over 71% by end of February 24, 2023. In value terms, the losses are over ₹17.8 lakh crore.

Now, Adani Group's market value together is even not even half of the m-cap of Ambani's RIL whose valuation is over ₹16.14 lakh crore. While Adani's m-cap cumulatively is lower by 42.4% from Tata Group-backed TCS m-cap of over ₹12.44 lakh crore.

In one month, in percentage terms, the worst hit Adani stocks would be Adani Total Gas declining by nearly 81% followed by Adani Green and Adani Transmission with a drop of over 74.5% and 74%. While flagship firm Adani Enterprises also faced severe brunt as its share price dipped by nearly 62%.

The least to face the blow would be cement arm ACC and ports flagship Adani Ports whose share price plunged by around 26% and 26.5%.

Overall, Adani shares have nosedived by 25% to nearly 82% from January 24 to February 24.

Hindenburg's report which came in late January made some serious allegations about Gautam Adani's port-to-energy empire. The short seller alleged that Adani Group has committed fraud, stock manipulation, and tax evasion among other key claims. This led to spill over on street protests, a massive decline in Adani's wealth, and one of the biggest market value erosion in the Indian market. Many companies and banks who have exposure in Adani stocks have also faced the heat of panic selling.

On January 24, Hindenburg in its report said, "we reveal the findings of our 2-year investigation, presenting evidence that the ₹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."

The downfall in Adani shares even toppled benchmarks Sensex and Nifty which were already struggling since the start of 2023 due to their high valuation and amidst macroeconomic risks.

Hindenburg had claimed that the 7 Adani named stocks are more than 85% overvalued. Also, looks like, Hindenburg's prediction of an 85% downside in Adani stocks is likely a soon-to-be reality.

In its note, Hindenburg argued that 7 key Adani listed companies have seen their stock prices mysteriously surge over the past 3 years – with most increasing in multifold – ranking them individually among the largest companies in India.

Data from Hindenburg revealed that the 3-year gain of Adani Enterprises stock was around 1,398%, Adani Transmission stock was up 729%, Adani Total Gas was up 2,121%, Adani Green Energy was up 908%, and Adani Power was up 332%, Adani Ports up 98%. While Adani Wilmar stock was up 149% from its IPO in February 2022.

Hindenburg argued that the 7 key Adani stocks are over 85% overvalued.

On a blended basis, compared to industry peers, Hindenburg also said that they see over 85% downside in Adani shares purely on fundamentals.

Whether Adani shares will see over 85% downside ahead will be keenly watched. But after the Hindenburg report, Adani shares have definitely made some huge corrections from 52-week highs.

Using BSE data, it is seen that Adani Green has nosedived by over 84% from its 52-week high, while Adani Transmission and Adani Total Gas plunged by over 83% and 81% from their 52-week highs. Adani Enterprises also fell by nearly 69% from its 1-year high.

Overall, 10 listed Adani shares including cement and media business, have plummeted in the range of 37% to over 84% from their 1-year highs.

Due to the carnage of Adani shares, their chief Gautam Adani's wealth has also declined by $79 billion year-to-date to $41.5 billion. His rank in the ultra-rich on the Bloomberg index has toppled to 29th currently. Before Hindenburg's report, Adani was among the top five billionaires.

At present, Adani's empire faces court hearings and regulatory scrutiny.