Shares of Adani group of companies continued to fall during Friday's trading session, with flagship Adani Enterprises Ltd (AEL) tumbling more than 18% to Rs2,762.15. In contrast, five companies hit lower circuits on the BSE. Adani group has threatened punitive action against Hindenburg Research, while the US-based research firm says it stand by its report and any action against it would be 'meritless'.
Adani Enterprises closed Friday 18.52% down at Rs2,762.15, while Adani Ports and Special Economic Zone Ltd ended the day 16.03% lower at Rs598.60 on the BSE.
Shares of five group companies, Adani Power Ltd, Adani Transmission Ltd, Adani Green Energy Ltd, Adani Total Gas Ltd and Adani Wilmar Ltd, hit the lower circuit.
Adani Transmission, Adani Green Energy and Adani Total Gas hit 20% lower circuit to end the day at Rs2,009.70, Rs1,484.50 and Rs2,934.55, respectively.
Adani Power and Adani Wilmer closed the week 5% down at Rs248.05 and Rs517.30, respectively.
Adani group's two other companies Ambuja Cements Ltd also fell 17.16% to close the week at Rs381.15, while ACC Ltd ended 13.04% down at Rs1,884.05 on the BSE. The benchmark Sensex ended the week 1.45% down at 59,330.90 points.
In a release, Jatin Jalundhwala, group head for legal at Adani, says, "We are deeply disturbed by this intentional and reckless attempt by a foreign entity to mislead the investor community and the general public, undermine the goodwill and reputation of the Adani group and its leaders, and sabotage the FPO (follow-on public offering) from Adani Enterprises. We are evaluating the relevant provisions under US and Indian laws for remedial and punitive action against Hindenburg Research."
In reply, the US-based research firm says, "...we would welcome it. We fully stand by our report and believe any legal action taken against us would be meritless. If Adani is serious, it should also file suit in the US, where we operate. We have a long list of documents we would demand in the legal discovery process."
On Friday, all the Adani group stocks continued their decline, with its flagship company Adani Enterprises, falling by more than 3.5% during the morning session.
Shares of three companies, Adani Total Gas, Adani Green Energy and Adani Transmission, were hit the hardest. Adani Total Gas tumbled 16.6% to Rs3,059.15, while Adani Transmission shares fell 12.4% to Rs2,198 and Adani Green Energy by 12.42% to Rs1,624.95.
At 10.37am, Adani Enterprises was trading 3.50% down at Rs3,271 on the BSE, while the 30-share Sensex was down 551 points at 59,653.21 points.
Both Adani Ports and Special Economic Zone Ltd and Adani Power Ltd fell by nearly 5% to Rs680.20, and Rs248.05, respectively.
Shares of Adani Wilmar Ltd declined nearly 5% to R517.30 on the BSE.
In its release, Adani group has alleged "Clearly, the report and its unsubstantiated contents were designed to have a deleterious effect on the share values of Adani group companies as Hindenburg Research, by their own admission, is positioned to benefit from a slide in Adani shares."
While publishing the report on 24 January 2023, Hindenburg had mentioned that it holds short positions in Adani group companies through US-traded bonds and non-Indian-traded derivatives, along with other non-Indian-traded reference securities.
Mr Jalundhwala from Adani says, "The maliciously mischievous, unresearched report published by Hindenburg Research on 24 Jan 2023 has adversely affected the Adani Group, our shareholders and investors. The volatility in Indian stock markets created by the report is of great concern and has led to unwanted anguish for Indian citizens."
Hindenburg, however, says, Adani has not addressed a single substantive issue it raised in the report. "At the conclusion of our report, we asked 88 straighforward questions that we believe give the company a chance to be transparent. Thus far, Adani has answered none of those questions."
The US-based investment research firm with a focus on activist short-selling claimes "the seven key listed companies of Adani group are 85%+ overvalued even if you ignore our investigation and take the companies' financials at face value."
Last year in October, shares of Adani group of companies suffered huge decline. The same stocks have put in a massive rally over the past three years. The correction in October was attributed to the global negative macro-economic environment and the group's huge debt. Adani groups' debt papers have been falling in contrast to its rising equity shares.
While the stocks of Adani group have outperformed the markets, its debt instruments are facing a rout. The bonds of Adani group companies have declined this year due to concerns about the group debt. According to Bloomberg, bonds of group companies, including Adani Green Energy and Adani Transmission Step-One Ltd, mostly underperformed the broader Indian market. (Read: Adani Stocks Crash on Monday