scorecardHindenburg Effect: Last 9 days wipe out gains clocked by Adani Group in 2022
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Hindenburg Effect: Last 9 days wipe out gains clocked by Adani Group in 2022

Hindenburg Effect: Last 9 days wipe out gains clocked by Adani Group in 2022
Stock Market3 min read
  • The Hindenburg fallout has wiped out all the gains made by Gautam Adani and the Adani Group in all of 2022.
  • Gautam Adani’s wealth has declined by nearly $58 billion since January 24, and from being the third richest person, he’s now out of the top 20.
  • The combined market capitalization of the Adani Group companies, excluding ACC and Ambuja Cements, has fallen by ₹11.12 lakh crore in this period.
The post-Hindenburg rout in Gautam Adani and the Adani Group is best illustrated by this – the last 9 days have wiped out more wealth and market capitalization of Gautam Adani and the Adani Group than they gained in all of 2022.

Adani’s fall from grace has been fast – he began 2023 as the third richest person in the world, and is now out of the top 20 on Bloomberg Billionaires Index.

Adani’s Hindenburg Disaster

Hindenburg Research, the US-based short seller which released a report alleging stock manipulation and accounting fraud in the Adani Group companies, is named after the Hindenburg Disaster.

Hindenburg’s report on the Adani Group was two years in the making, when Gautam Adani’s wealth increased from $10 billion to $119 billion.

However, since January 24, when the Hindenburg report was released, the decline in Adani’s fortunes has been swift and drastic, wiping out nearly half of his wealth in just nine days.

Adani’s wealth now stands at $61.3 billion after a decline of nearly $58 billion. The last time Adani’s wealth was at this level was in August 2021.

For context, Adani was the top wealth gainer in 2022, adding $44.6 billion to his net worth.

Adani’s fortunes tied closely to those of the Adani Group

Adani’s personal fortune is largely tied to the Adani Group, as reflected in the large shareholding of the promoters in the group companies. As such, the decline in Adani’s personal wealth is a reflection of the decline in Adani Group’s market capitalization.

In the last nine days, the combined market capitalization of the Adani Group, excluding ACC and Ambuja Cements, has declined by ₹11.12 lakh crore, wiping out 47.8% of investor wealth in the process.

ACC and Ambuja Cements have been excluded in this calculation since their acquisition was complete only in September 2022.

Two companies – the flagship Adani Enterprises, and Adani Ports & SEZ have been the biggest losers, accounting for ₹6.35 lakh crore of the total decline in the group’s market capitalization.

Troubles have continued to mount for the Adani Group in the past few days and the bottom is still not in sight. After reports of beleaguered investment banker Credit Suisse halting margin loans on bonds of Adani Group companies, Citigroup’s wealth arm has also reportedly followed suit.

Piling on the misery, Dow Jones removed Adani Ports & SEZ from its sustainability indices (DJSI) and the National Stock Exchange (NSE) put three Adani Group companies, namely Adani Enterprises, Adani Ports & SEZ, and Ambuja Cements under Additional Surveillance Mechanism (ASM) measures.

Further, according to a Bloomberg report, Adani Group companies’ bonds have hit distressed levels, falling to 70 cents on the dollar. The yields have also shot up drastically to more than 30% in secondary markets, while junk bonds’ yield stood at 8.14%.

However, to placate investor concerns, Gautam Adani has reportedly offered to prepay some loans backed by share pledges. Despite this, investors remain spooked, with the flagship Adani Enterprises’ stock tumbling by as much as 35% in the first half of trade on Friday.

In my opinion $ADANIPOWER.NSE has broken down severely and 200 is the next key support level. If there is no recovery then things can look tough for this stock. Adani Group has been the talk of the town due to a report by Hindenburg Research. The stocks have been in news for all the negative reasons.

— (@thebullofdalalstreet) February 01, 2023]]>


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