Adani Group shares and bonds extend sell-off

Shares in most of Adani Group’s listed companies fell on Monday despite the Indian conglomerate’s lengthy response to a short seller report that wiped $50bn off the market value of its subsidiaries last week.

Most Adani-controlled stocks sold off, compounding losses from last week. Adani Green Energy fell more than 18 per cent, while Adani Transmission and Adani Total Gas both dropped the maximum 20 per cent allowed by the Bombay Stock Exchange and the National Stock Exchange of India.

Adani Enterprises rose about 2 per cent on Monday to Rs2,816 ($34.54) in Mumbai, while two cement companies controlled by the group also posted moderate gains.

Multiple bonds issued by Adani Group entities also fell on Monday, with an Adani Ports dollar bond maturing in 2027 dropping seven cents to $0.72 on the dollar. Another bond issued by Adani Transmission and maturing in 2026 fell three cents to about $0.83 on the dollar.

The early gains for Adani Enterprises came short of taking shares back above Rs3,112, the bottom end of the price range for its $2.4bn follow-on equity offering set to close on Tuesday. The company has said the sale will go ahead as planned despite concerns it might struggle to attract investors.

Those concerns stem from a short seller report published by New York-based Hindenburg Research on Wednesday, just before the new share offer launched, that alleged Adani had engaged in “brazen stock manipulation and accounting fraud”.

By the end of trading on Friday, the report had wiped about 20 per cent, or more than $50bn, from the value of the Adani Group’s listed companies.

In its response, released on Sunday and running 54 pages with about 350 more of appendices, the industrial conglomerate owned by billionaire Gautam Adani said Hindenburg’s report had “caused serious and unprecedented adverse impact on our investors”.

The allegations were “not merely an unwarranted attack on any specific company but a calculated attack on India, the independence, integrity and quality of Indian institutions, and the growth story and ambition of India”, it said.

The group also dismissed concerns about its high-leverage growth model, stating that the “leverage ratios of Adani Portfolio companies continue to be healthy and are in line with the industry benchmarks of the respective sectors”.

In a follow-up note on Monday following Adani Group’s response, Hindenburg said the company had “attempted to conflate its meteoric rise and the wealth of its chair, Gautam Adani, with the success of India itself”.

The short seller added “that the core allegations of our report — focused on numerous suspect transactions with offshore entities — were left completely unaddressed”.

The offering was intended to widen the shareholder register of Adani’s sprawling industrial group, much of which is currently owned by related entities and Mauritius-based funds.

The follow-on offer of 45.5mn shares by Adani Enterprises had drawn bids for a little more than 600,000 shares by late morning local time, according to data from the Bombay Stock Exchange.

Much of the demand for equity sales in India typically comes late in the offering period, often on the final day.