Stock manipulation allegations hit Adani Group

Even though the economy has had it pretty rough throughout the pandemic, the Adani Group, led by Gautam Adani, had a great year in 2022.

Stock manipulation allegations hit Adani Group
Electric power transmission pylon miniatures and Adani Green Energy logo are seen in this illustration taken, December 9, 2022. REUTERS/Dado Ruvic/Illustration

The backstory: Even though the economy has had it pretty rough throughout the pandemic, the Adani Group, led by Gautam Adani, had a great year in 2022. Adani's personal wealth skyrocketed by over US$100 billion in just three years, putting him near the top of the world's billionaires list. By February, he was India's richest person, and by April, he had become a centibillionaire. But, his crowning achievement came in September when he became the second richest person in the world.

To top it off, by the end of last year, his fortune had grown by US$44 billion, according to the Bloomberg Billionaires Index. This success isn’t surprising, considering the Adani Group is a huge,  diverse company with interests in ports and airports, coal mining and trading, natural gas, media and cement.

The development: US investment firm Hindenburg Research came out with an explosive report alleging that the Adani Group has been involved in stock manipulation and accounting fraud for decades. This news hit Adani's net worth hard, causing it to drop by a cool US$5.5 billion on Wednesday. But, even with this setback, Adani is still the richest person in Asia. It’s not the first time people have wondered about the Adani Group's financial practices, with other research firms pointing out its high debt levels and inflated valuations. But, the timing was particularly bad, as Adani Enterprises was getting ready for a key share sale.

Key comments:

“Infrastructure firms are generally relatively sleepy, low growth, low multiple enterprises, yet valuation metrics of the Adani listed companies are comparable to the frothiest of high-growth tech companies,” said US investment research firm Hindenburg Research in its report. “Compared to industry peers, we see 85%+ downside purely on fundamentals.”

“Hindenburg Research said it was shorting the stocks of Adani Group and accused firms owned by Asia’s richest man of corporate malpractice,” wrote Bloomberg TV on Twitter.

“The report is a malicious combination of selective misinformation and stale, baseless and discredited allegations that have been tested and rejected by India’s highest courts,” said Jugeshinder Singh, Adani Group’s chief financial officer. “Our informed and knowledgable investors are not influenced by one-sided, motivated and unsubstantiated reports with vested interests.”