Hindenburg shorts India's Adani Group, flags debt and accounting concerns

Hindenburg shorts India’s Adani Group, flags debt and accounting concerns

BENGALURU, Jan 25 (Reuters) – Hindenburg Research mentioned on Wednesday it held quick positions in India’s Adani Group, accusing the conglomerate of improper in depth use of entities arrange in offshore tax havens and expressing concern about excessive debt ranges.

The report, which comes days forward of a $2.5 billion share providing by flagship agency Adani Enterprises (ADEL.NS), despatched shares in Adani group companies sliding.

Hindenburg, a well-known U.S. short-seller, mentioned key listed firms within the group managed by billionaire Gautam Adani had “substantial debt” which has put the complete group on a “precarious monetary footing”.

It additionally mentioned that seven Adani listed firms have an 85% draw back on a basic foundation as a consequence of what it known as “sky-high valuations”.

An Adani spokesperson didn’t instantly reply to Reuters request for touch upon the report, which Hindenburg mentioned was primarily based on analysis that concerned talking with dozens of people, together with former Adani Group executives in addition to a evaluation of paperwork.

Hindenburg mentioned it held its quick positions by way of U.S.-traded bonds and non-Indian-traded by-product devices.

Adani has repeatedly dismissed debt concerns. Adani Chief Financial Officer Jugeshinder Singh informed media on Jan. 21 “Nobody has raised debt concerns to us. No single investor has.”

In the wake of the Hindenburg report, Adani Ports And Special Economic Zone (APSE.NS) slid 7.3% to its lowest stage since early July, whereas Adani Enterprises dropped 3.7% to a close to three-month low.

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Adani-owned cement companies ACC (ACC.NS) and Ambuja Cements (ABUJ.NS) fell 6.7% and 9.7% respectively.

Hindenburg’s report mentioned that 5 of seven key listed Adani firms have reported present ratios – a measure of liquid property minus near-term liabilities – under 1. This, the short-seller mentioned, instructed “a heightened short-term liquidity threat.”

Adani Group’s complete gross debt within the monetary yr ending March 31, 2022, rose 40% to 2.2 trillion rupees.

Refinitiv information reveals that debt in any respect the Adani Group’s seven key listed Adani firms exceeds fairness, with debt at Adani Green Energy Ltd (ADNA.NS) exceeding fairness by greater than 2,000%.

CreditSights, a part of the Fitch Group, described the group final September as “overleveraged” and mentioned it had concerns over its debt. While the report later corrected some calculation errors, CreditSights mentioned it maintained its concerns over leverage.

Hindenburg is thought for shorting electrical truck maker Nikola Corp (NKLA.O) and Twitter although it later reversed its place in Twitter.

Shares in Adani Enterprises surged 125% in 2022, whereas different group firms, together with energy and fuel items, rose greater than 100%.

Reporting by Mrinmay Dey, Chris Thomas and Aditya Kalra; Additional reporting by Miyoung Kim; Editing by Dhanya Ann Thoppil and Edwina Gibbs

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