Rs 7 Lakh Crore Loss: Adani Investors Suffer Major Setback Since Hindenburg Report in January 2023

Mumbai, November 23, 2024: Investors in Adani Group companies have seen their wealth shrink dramatically by Rs 7 lakh crore ($82.9 billion) since the publication of the Hindenburg Research report in January 2023. The report accused the conglomerate of stock manipulation and accounting fraud, triggering a sharp decline in the market value of Adani’s listed companies.

As per market data, the market capitalization of ten Adani group companies dropped from Rs 19.24 lakh crore ($227.78 billion) on January 23, 2023, just a day before the Hindenburg report surfaced, to Rs 12.24 lakh crore ($144.87 billion) by November 21, 2024. This loss includes a massive dip of Rs 2.22 lakh crore on November 21, when fresh allegations related to a Rs 2,000 crore bribery charge surfaced in US court filings, further rattling investor confidence.

Key Developments:
Hindenburg Report Fallout: On January 24, 2023, Hindenburg Research accused Adani Group of manipulating stock prices and engaging in fraudulent practices for decades. The report triggered a month-long market rout that saw Adani companies lose $140.1 billion in value, from $227.78 billion to $80.67 billion by February 2023.

Temporary Recovery: Despite the initial battering, Adani stocks managed to recover gradually. By June 2024, the group’s market capitalization rose to $229.87 billion (Rs 19.42 lakh crore), bolstered by an investment of Rs 15,000 crore from GQG Partners. However, a fresh set of allegations surfaced in late 2024, involving Sebi Chairperson Madhabi Puri Buch, contributing to another dip in stock prices.

Bribery Allegations: On November 21, 2024, US court filings brought to light bribery allegations involving the Adani Group, further fueling a decline in stock prices. Hindenburg, citing whistleblower documents, alleged that Sebi’s head and her husband had stakes in offshore funds linked to the scandal, although the Buchs have denied these claims.

Market Volatility: The market volatility has created uncertainty, with Adani stocks experiencing significant fluctuations. As of November 2024, the market capitalization of the group stood at Rs 14.49 lakh crore, reflecting a general weakness in the market, with the Sensex falling by 8,800 points since late September.

Impact on Retail and Institutional Investors:
Retail Investors: Retail investor holdings in Adani companies remain relatively small, with the highest at 9.2% in ACC and 5.46% in Adani Total Gas. However, many investors have been left reeling from the steep losses.

Institutional Investors: Large financial institutions, including LIC (Life Insurance Corporation) and other mutual funds, hold significant stakes in Adani Group companies, further highlighting the scale of the damage. Many analysts have expressed concerns about the volatility and the impact of negative reports on investor sentiment.

Expert Insights:
Market experts advise caution for retail investors considering exposure to the Adani Group, particularly given the high volatility. While some recommend focusing on stable entities with consistent cash flow generation, others urge diversifying portfolios away from high-risk stocks.

“The rise and fall in Adani shares have created uncertainty, and such volatility is not favorable for retail investors or long-term fund strategies,” said a market participant.