Rs 4 lakh crore gone in 2 days! Adani bulls nurse wounds after short-seller's attack

NEW DELHI: A 32,000-word report by American short-seller Hindenburg Research has left a Rs 4 lakh crore worth scar on the portfolios of Adani bulls who have been enjoying the one-way rally that defied gravity and all valuation metrics in the last few years.

In the last two trading sessions since the release of the report, which has been described as "maliciously mischievous and unresearched" by billionaire Gautam Adani's team, the market capitalisation erosion has been around Rs 4 lakh crore.

Wednesday's crash itself wiped off Rs 1 lakh crore from Adani stocks. The selloff deepened on Friday, despite the Ahmedabad-based diversified conglomerate denying allegations and threatening court cases, with 7 out of 10 stocks seeing double-digit losses.

Shares of Adani Green, Adani Total Gas and Adani Transmission ended with deep cuts of 20% each. Adani's new acquisition Ambuja Cements lost one-fourth of its value in just one trading session before ending the day 17% lower at Rs 345.10.

Three other group stocks - Adani Power, Adani Wilmar and NDTV - were locked in the 5% lower circuit limits as Adani's entire empire was blinking red on Dalal Street.

Although the Rs 20,000 crore follow-on public offer or FPO of the group's flagship entity Adani Enterprises had enough takers in the anchor round on Wednesday, there are fears of the sentiment in the retail segment getting hit as the issue opened for public subscription today.

At the upper band, the FPO was priced at Rs 3,276 and retail investors were being offered a discount of Rs 64 per share in the fund-raiser. The price arbitrage has now been erased as the stock ended 18.5% lower at Rs 2,762.15.

Most Adani Group companies lack analyst coverage but have given dizzying returns to faithfuls.

Proxy advisor firm InGovern came out in Adani's defense saying that Hindenburg, as a short seller, should be considered as just another market participant who has a motivated view to release a negative report with aim to bring down the stock price.

"Though the Hindenburg report talks of high valuations and over leverage by the Adani group, the nature of the industries in which Adani group companies operate and data on debt holding in Adani group companies indicate otherwise," it said.

Valuation wise, however, some Adani Group stocks remain one of the most expensive on Dalal Street as they have low free float and high promoter holding.

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