The largest FPO in the nation has been launched by Adani Group. It seeks to raise Rs 20,000 crores from investors. However, there hasn’t been much of a reaction so yet. The research by Hindenburg was made public just before Adani’s Follow on Public Offer (FPO), and the outcome was clear: only 1% of the FPO’s shares have been subscribed to, with 2% of the retail part.
Hindenburg Allegations
In its 106-page analysis, Hindenburg expressed worry over the large percentage of stock owned by promoters or other significant shareholders in Adani Group-listed firms that have been pledged for loans.
It is reportedly said that Adani even though the richest man in India is the 10th largest payer of Tax. It has avoided paying taxes. Adani group has been accused of Diamond Trading, Tax Evasion & Over-Invoicing.
Payment of ₹780 Crores to an Offshore – AEL paid the money in order to cover Terminal Charges in Australia. Hindenburg claims that Adani Group Co. owns NQXT Not paying them would have been a Related Party Transaction and not one that was conducted impartially.
FIIs in charge of Adani’s public offering- Hindenburg asserted Adani Green selected a broker for its share sale in 2019 that has been implicated in market rigging. Following the share sale, some FIIs saw a rise in shareholding, indicating that they took part in the same.
According to Hindenburg, the Adani group has 578 subsidiaries; transacted 6,025 related parties in FY22; Adani: Infra biz involves establishing a subsidiary for each project, and Adani’s corporate structure is convoluted. However, the business asserted that it complies with all relevant laws and regulations.
Questions on Overseas Entities Buying Adani Group Co shares-The Adani group’s shareholdings have generated a lot of debate over the previous year as its equities greatly increased shareholder value. The fact that investment funds, which controlled a sizable portion of the float, were offshore companies had raised questions in the media. These funds had exclusively purchased Adani Group shares as all of their assets were under management only into Adani group’s stock. Former workers of the company that managed one of the funds, according to Hindenburg, said Adani controls the shares.
Hindenburg has also accused Adani of getting Journalists jailed
Allegations made in the past have been highlighted among them were stockholders, participation with stock manipulator Ketan Parekh, siphoning off money from publicly traded firms, use of shell companies, flaws with financial reporting, and lack of disclosures.
Some of these claims served simply to draw attention to earlier inquiries into the actions of the Adani group.
Highlights
HINDENBURG stated that “Even if you ignore the findings of our investigation and take the financials of Adani Group at face value, its 7 key listed companies have 85% downside purely on a fundamental basis owing to sky-high valuations”.
Key listed Adani companies have also taken substantial debt, including pledging shares of their inflated stock for loans, putting the entire group on precarious financial footing 5 of 7 key listed companies have reported ‘current ratios’ below 1, indicating near-term liquidity pressure
Financials of Adani Group
Deeply over-leveraged –
Its Net Debt to EBITDA ratio has reduced from 7.6x to 3.2x
EBITDA has grown at 22%,
Net Debt has grown at 11% CAGR in the last 9 yrs.
Response by Adani Group
Adani Group provided an in-depth response in a 413-pg rebuttal that covered its governance standards, credentials, creditworthiness, best practices, transparent activity, and excellence in financial and operational performance. According to Adani, These claims are: Unsubstantiated accusations, without evidence and No understanding of Indian laws and related party disclosures
68 of Hindenburg’s 88 queries pertain to information that Adani Group firms have previously properly disclosed in their distinct annual reports, offering memorandums, financial statements, and periodic stock market filings.
16 of the 20 questions concern public shareholders and their funding sources,
While the remaining 4 are merely baseless accusations.
The group suggested that Hindenburg’s conduct is a calculated securities fraud and that this would enable the admitted short seller to book a massive gain while investors lose
Impact of the Fall on Adani Group Stocks
Given the 20% fall in the share price during the last two trading days, Anchor Investors risk suffering significant losses.
Stocks of the Adani Group have lost over $ 48 billion in value.
As of Jan 25 Adani group stocks dragged the Stock indices on the Indian Bourses today.
Adani Ent. -1. 50%
Adani Green -3. 08%
Adani Ports -6. 59%
Adani Trans. -8. 85%
Shares in the majority of Adani’s seven listed firms, which operate in industries ranging from ports to power plants, plummeted by between 3% and more than 8% on Wednesday.
