Impact of Hindenburg Research Report: Shares of Adani Enterprises Increase While Other Group Stocks Continue to Lose

In New Delhi: The majority of Adani Group shares continued to drop sharply on Monday as investors remained unconvinced by the Indian conglomerate’s response to criticism from a U.S. short-seller, pushing the firms’ combined stock market losses to $66 billion over the course of three days.

Flagship Adani Enterprises, which this week will be put to the test with a follow-on share offering, increased by 4%, but this was much below the offer price and below earlier gains of as high as 10%.

Adani, run by Asia’s richest man Gautam Adani, has been at odds with Hindenburg Research and responded on Sunday to a report from the short-sellers that raised issues with the company’s debt levels and usage of tax havens. He stated that it has made the required regulatory disclosures and conforms with all local regulations.

Adani Transmission, Adani Total Gas, and Adani Green Energy all had 20% declines on Monday. Adani Ports and the Special Economic Zone decreased by 0.5%, while Adani Power and Adani Wilmar both had declines of 5%.

Weak investor enthusiasm entered the second day of Adani Enterprises’ $2.5 billion secondary share offering. The share price, which ranged from 3,112 to 3,276 rupees, was significantly lower than the stock’s current trading price of 2,892 rupees.

The issue received 1% more subscriptions on Friday, the first day of the sale, despite a larger decline in stock prices.

According to preliminary information from stock exchanges on Monday, Adani has now received offers for 687,840, or 1.5%, of the 45.5 million shares that are up for sale. On Tuesday, the agreement is finalized.

According to the data

Neither domestic nor international institutional investors, nor mutual funds, have placed any offers thus far.

Hemang Jani, the stock strategist at Motilal Oswal Financial Services, said: “Retail participation is expected to have a shortfall with current market prices still trailing the offer price and sentiment taking a knock due to the Hindenburg issue.”

Even though there is a chance the share sale won’t go through, it will be important to watch to see how institutional investors participate right now.

Even though sources claimed bankers of the nation’s largest secondary share sale were considering extending the timeline beyond January 31 or adjusting the price due to the decline in its share price, Adani Group told the media in a statement on Saturday that the sale remains on schedule at the planned issue price.

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According to Indian legislation, the share offering must receive a minimum of 90% subscription; otherwise, the issuer is required to repay the full cost. Among the investors who submitted bids for the anchor portion of the offering were Maybank Securities and the Abu Dhabi Investment Authority.

Life Insurance Corporation (LIC), a state-run insurance goliath, contributed as well, taking 5% of the anchor component, or roughly $734 million. It already owns 4.23% of the main Adani company, and it also has a 9.14% holding in Adani Ports and a 5.96% stake in Adani Total Gas.