Counting Losses: Adani Group Stock Rout Hits Rs 5.6 Trillion In 3 Days

Shares of a majority of Adani group firms continued their downward trend on Monday with the three-day market capitalisation (m-cap) erosion going past Rs 5 trillion (Rs 5.6 trillion). Rs 1.4 trillion got shaved off on Monday even as the group issued a rebuttal quashing allegations of fraud made by Hindenburg Research.

Shares of Adani Green Energy and Adani Total Gas hit the 20 per cent lower circuit for a second day, closing at Rs 1,189 and Rs 2,342, respectively. Adani Transmission dropped 15 per cent to end the day at Rs 1,707 a share.

The three stocks have declined close to 40 per cent each in the past three days.

Adani Enterprises and Adani Ports & Special Economic Zone—which are part of the Nifty 50 index---managed to close with gains of 3.9 per cent and 0.6 per cent, respectively, closing at Rs 2,869.85 and Rs 600.80. Both the stocks had risen almost 10 per cent during the day.

Almost all counters opened with gains but saw selling pressure intensify during the day as the 413-page reply issued by the Adani group failed to revive investor confidence.

In its reply, the Adani group portrayed Hindenburg’s allegations as “baseless and an attack against India itself”.

The report also threatens to weaken broader confidence in India, until recently a top investment destination for Wall Street, and accelerate a nascent shift towards a reopening China, the group added.

In its rebuttal published on Sunday, Adani said some 65 of the 88 questions raised by Hindenburg had been addressed in the conglomerate’s public disclosures, describing the short seller’s conduct as “nothing short of a calculated securities fraud under applicable law”. The group reiterated it would “exercise our rights to pursue remedies to safeguard our stakeholders before all appropriate authorities”.

Hindenburg said Adani’s rebuttal ignored all its key allegations, and was “obfuscated by nationalism”. The conglomerate’s statement failed to specifically answer 62 of Hindenburg’s 88 questions, the short-seller said on Monday, and equated the company’s “meteoric rise” and the wealth of Asia’s richest man “with the success of India itself.”

Brian Freitas, an analyst working with research platform Smartkarma, said: “Not sure if Adani’s rebuttal is enough to assuage investor concerns. Just because things are disclosed and known, does not make them right. How does such a big group explain no analyst coverage and no mutual fund holdings?” he said.

The recent drop has seen the group, which had become India’s most valuable last year, slip below the Tata group and Mukesh Ambani’s Reliance in terms of market value. Gautam Adani, too, has seen his ranking slip to seventh on the global billionaire list.