Do you know what Hindenburg Research is? Do you have any idea about how Hindenburg Research targeted Adani Group and ultimately targeted India?
For 6-7 days, there has been a big buzz about the Hindenburg Research Adani. Yes, the exposed game was on World’s 3rd Richest Man Gautam Adani this time. Hindenburg Research published a report on the Adani group on January 24, alleging that it flagged concerns about improper use of offshore tax havens and high debt, causing shares to crash.
The Hindenburg Research group holds minority positions in Adani group companies. Hindenburg Research said there is evidence the group engaged in a brazen stock manipulation and accounting fraud scheme over decades.
What is Hindenburg Research?
Hindenburg Research is founded by Nate Anderson, CFA, CAIA, specializing in forensic financial research. Their experience in the investment management industry is almost of decade (10 years), with a historical focus on equity, credit, and derivatives analysis.
In simple terms, it looks for corruption or fraud in the business world, such as accounting irregularities and bad actors in management. They are also well known for short-selling.
Hindenburg Research Till Date
|Report Generated Against||Year of Report|
|WINS Finance||June 2020|
|Trading Genius Brands||June 2020|
|China Metal Recourses Utilization (Zombie Company)||May 2020|
|SC Worx||April 2020|
|Predictive Technology Group||March 2020|
|HF Foods||March 2020|
|Bloom Energy Companies||September 2019|
|Yangtze River Port & Logistics||December 2018|
|Irregular Acquisitions And Dealings Between Liberty Health Sciences and Aphria||December 2018|
|Riot Blockchain||December 2017|
|Opko Health||November 2017|
|Pershing Gold||November 2017|
Above all, the fraud research for the reputed companies also includes a defense of the practice of short-selling and that they play an essential role in exposing fraud and protecting investors when holding short positions in the company before publishing the report.
Is The Hindenburg Research Attacking On India On The Name Of Adani Group?
After Hindenburg Research shared a report on Adani group, Adani Group stated that This is not just an unwarranted attack on a specific company but a systematic attack on the independence, integrity, and quality of India, Indian institutions, and India’s growth story and ambition.
The report was shared just before the selloff in Adani Group shares came when Adani Group’s flagship firm Adani Enterprises, raised Rs. 20,000 crore follow-on public offer known as FPO.
The motto of the Hindenburg Research was, if the price of a company’s stock or bonds falls because of the negative attention from the report, Hindenburg can profit. Because Hindenburg having a small part of Adani Group’s Shares.
But Indian Market is facing huge losses:
- Dalal Street investors have left poorer by Rs 6.8 lakh crore as the total market capitalization of BSE-listed stocks dropped to Rs 269.7 lakh crore.
- Indian Bank Stocks were among the worst affected afte the report shared as Nifty Bank lost over 1,300 points or we can say 3.1%. PSU bank stocks, which were outperforming in the last few months, were among the worst hit, with losses going up to 7% as investors were worried about the contagion impact of exposure to Adani Group.
- Group flagship Adani Enterprises, whose FPO opened for public subscription today, fell 18.5% to close at Rs 2,762.15.
- Adani Ports, Adani Green, and Adani Total Gas NSE -5.00% tumbled to 20% during the day, while Ambuja Cements saw a one-fourth drop in value. Shares of Adani Power NSE 4.99% hit the 5% lower circuit limit to close at Rs 248.05.
- Adani Wilmar NSE 4.99% and NDTV NSE 4.98% also hit a 5% lower circuit at Rs 517.30 and Rs 256.35, respectively.
- PSU bank stocks were worst hit, with India’s largest lender SBI falling 5%. Other top losers included Bank of Baroda NSE -1.16%, PNB, and ICICI Bank.
- Foreign institutional investors, or FIIs, have been on a selling spree this month, taking the total outflow in equities to nearly Rs 23,000 crore in January, NSDL data showed. Today’s sale was around Rs 6,000 crore.
- Long positions held by FIIs in index futures decreased by 23,000 contracts since the last expiry, while short positions increased by 15,000.
What are the Hindenburg Research Adani Updates?
Statement of Hindenburg Research
This all started here when Hindenburg Research stated that the seven listed companies of Gautam Adani (Adani Group) have an 85% drop in fundamentals due to sky-high valuations.
Adani Responded On The Report
The response stated that the report was baseless and labeled the allegations “unfounded speculation.” It is a matter of great concern that the statements of an entity sitting thousands of miles away without any credibility or ethics have caused a severe and unprecedented adverse impact on our investors.
They also stated that it was not just an unwarranted attack on a specific company (Adani Group) but a well-planned attack on India.
Hindenburg Research Responded To The Adani’s Response
Adani’s response needs to address all of the critical points raised in the report. Instead, Adani has promoted ‘a nationalist narrative’ that seeks to ‘associate the meteoric rise and wealth of its chairman, Gautam Adani,’ with India’s success.
What Are Banks Saying After Hindenburg Research Against Adani?
The overall exposure to the Adani group is one-fourth of the ceiling prescribed under the Large Exposures Framework. Exposure has reduced in the last three years. Bank of Baroda said 30% exposure is either secured by a guarantee from a PSU or to a joint venture with a PSU.
SBI has an aggregate exposure of Rs 27,000 crore to Adani Group, which is 0.88% of the loan book as on December 31, 2022. Loans are against assets and businesses that are generating cash. So, we don’t see any challenge, and there is no reason to worry for us, SBI chief Dinesh Khara said.
Insurance major LIC company used to holds a 4.23% stake in the flagship Adani firm, while its other exposures include a 9.14% stake in Adani Ports and a 5.96% stake in Adani Total Gas. Now, they are worried about the losses as all the money belongs to common people of India.
Billionaire Gautam Adani-led Adani Group has moved to the 22nd spot on the Forbes Real-Time Billionaires list for 2023. Many big companies are going through significant losses, and all this is collectively affecting Indian Market.
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