Why is Hindenburg’s report on the Adani group so important?

Why is Hindenburg's report on the Adani group so important?

On January 24th, 2023, an American research company, Hindenburg published a report on Gautam Adani and The Adani group titled “Adani group: How the world’s 3rd richest man is pulling the largest con in corporate history”. They put up some serious allegations against Gautam Adani and the Adani group stating they have been included in stock market manipulation, money laundering, accounting fraud, creating a market bubble, and overvaluing their share price which will have a downslide of 85% if it comes back to their actual price. After this report is published, shares of the Adani group starts crashing. Gautam Adani face of loss of 4.17 Lakh Crore. Shareholders start selling their shares in the Adani Group. This created an impact that the Adani group’s shares has to face 20% of the average downslide in a single day.

But why is this report so important? Why are people taking Hindenburg’s report so seriously? Is the Adani group’s share really overvalued?

What is the importance of Hindenburg’s report?

In September 2020, Hindenburg published a report against Nikola Corporation, stating that they lied to their investors. As the result, Nikola corporation has to face a downslide of more than 96% in their net worth. Their net worth comes down to $1.34 billion from $34 billion. That’s why investors are giving so much importance to Hindenburg’s report. 

If Hindenburg is right, what impact will this report have on the Adani group, Gautam Adani, and the Indian economy?

  • According to Hindenburg the shares of the Adani Group are overvalued by an average of 819% and if it comes back to their actual price it will face a downslide of 85%. Gautam Adani has taken a loan on these overvalued shares, in case of a downslide in his company’s shares and his net worth, it is very unlikely that he will be able to pay back the loan. And in that case, the banks will face a huge loss which will directly or indirectly affect the Indian economy.
  • SBI didn’t specify the amount of debt, but a CLSA report says that the Adani group still has to pay 81,234.7 Crores to the banks, which is nearly 900% more than what Vijay Mallya owed to the bank at the time when he escaped to London.
  • Market experts and economists say the Indian economy is revolving around the Adani group for the past few years and in case of the Adani group goes down, whole of the India will have to face a financial crisis.

Economists, market experts, businessmen, and politicians, all of them are seeing it as an upcoming financial crisis in India which is already in a bad condition. This report can also play a big role in next year’s Loksabha election and election in 9 states this year as the congress leader Rahul Gandhi is already targeting Gautam Adani and the Adani group for so many years. 

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