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

BENGALURU, Jan 25 (Reuters) – Hindenburg Analysis stated 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 corporations sliding.

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

It additionally stated that seven Adani listed firms have an 85% draw back on a elementary foundation on account of what it referred to as “sky-high valuations”.

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

Hindenburg stated it held its quick positions via U.S.-traded bonds and non-Indian-traded by-product devices.

Adani has repeatedly dismissed debt issues. Adani Chief Monetary Officer Jugeshinder Singh instructed media on Jan. 21 “No one has raised debt issues to us. No single investor has.”

Within the wake of the Hindenburg report, Adani Ports And Particular Financial 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.

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

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

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

Refinitiv knowledge exhibits that debt in any respect the Adani Group’s seven key listed Adani firms exceeds fairness, with debt at Adani Inexperienced Vitality 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 stated it had issues over its debt. Whereas the report later corrected some calculation errors, CreditSights stated it maintained its issues 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 gasoline models, rose greater than 100%.

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

Our Requirements: The Thomson Reuters Trust Principles.