Gautam Adani’s personal wealth fell by an astounding $50 billion as his group company shares tumbled across the board hit by fraud accusations levelled by US hedge fund Hindenburg Research.
The 10 listed Adani Group companies fell by between 15 per cent and 25 per cent, bringing lower circuit-breaker rules into force.
The group’s flagship company, Adani Enterprises, which launched its follow-on public offer (FPO) for $2.4 billion today (Friday) fell by 18.31 per cent at close to Rs 2,766. That took it to below Rs 3,112, the lower end of the price band fixed for the FPO.
Another key company, Adani Ports and Special Economic Zone which opened at Rs 699, fell by about 24 per cent to Rs 538 at 1pm and then recovered to Rs 604 (15.24 per cent down) by 3.30pm.
The Forbes Real-Time Billionaire List reckoned that Adani is now worth $96.6 billion down from $119 billion two days ago. He’s now in seventh position on the Billionaire List down from fourth position earlier this week and third position before that. At a peak he was estimated to be worth $143 billion.
Fears about the impact of the Adani Group meltdown also hit giant insurer LIC and bank stocks. LIC opened at Rs 690 and fell to Rs 667 at close. LIC is said to have invested heavily in Adani Group companies. Similarly, Bank of Baroda shares fell by 7.48 per cent and State Bank of India fell 4.69 per cent.
Private sector bank Kotak Mahindra fellow by 2.10 per cent. This was despite the fact that brokerage company CLSA said yesterday (Thursday) that Indian private sector banks have very low exposure to the Adani Group. CLSA added: “For PSU banks, the exposure is more meaningful at 0.6% of loans and 5% of FY24 networth. PSU banks have also indicated that their exposure has not meaningfully increased in the past two to three years since the group has expanded into new businesses.”
The Sensex has fallen by 1,648 points during the last two sessions, largely triggered by the rout in Adani Group shares.
The market continued to fall today (Friday) even though the Adani Group challenged Hindenburg Research’s devastating report about it. India was one of the star performers among world markets in 2022 and the Adani Group contributed strongly to the market rise. Now there are fears that the rout in Adani shares could impact the entire market.
In about 30 days between mid-July 2022 and mid-August 2022 the share prices of several Adani Group companies soared and this raised Gautam Adani’s wealth by almost $25 billion in almost as many days.
CLSA reckons that the combined debt of top five Adani Group companies -- Adani Enterprises, Adani Ports, Adani Power, Adani Green and Adani Transmission – at around Rs 2.1 trillion. Several brokerages have expressed fears that that Adani Group was heavily overleveraged.
The Adani Group has threatened to sue Hindenburg Research LLC, the financial services company that accused the giant conglomerate of “pulling the biggest con in corporate history. Hindenburg, which says it tries to spot “man-made disasters” involving accounting irregularities, mismanagement and undisclosed transactions, responded by saying it would welcome a legal challenge particularly if it was to take place in an American court.
“Regarding the company’s (Adani’s) threats of legal action, to be clear, we would welcome it. We fully stand by our report and believe that any legal action taken against us would be meritless,” Hindenburg said in a punchy riposte to the Adani threat of legal action.
