‘Hindenburg will benefit from slide in Adani shares’: Adani Group plans legal action against research firm

Hindenburg report on Adani Group: In a statement by Jatin Jalundhwala, Group Head – Legal, Adani, said the volatility in Indian stock markets created by the report is of great concern.

Adani Group on Thursday said that its shareholders and investors were adversely impacted by the Hindenburg Research report that stated that the conglomerate engaged in accounting fraud and stock manipulation for decades. In a statement by Jatin Jalundhwala, Group Head – Legal, Adani, said the volatility in Indian stock markets created by the report is of great concern. It also said that short-seller Hindenburg will benefit from a slide in Adani shares. 

The conglomerate added that it is considering legal action against Hindenburg for its damaging report.

Adani Group said, “The maliciously mischievous, unresearched report published by Hindenburg Research on 24 Jan 2023 has adversely affected the Adani Group, our shareholders and investors. The volatility in Indian stock markets created by the report is of great concern and has led to unwanted anguish for Indian citizens.”

It added that Hindenburg published unsubstantiated contents which were designed to have a “deleterious effect on the share values of Adani Group companies as Hindenburg Research, by their own admission, is positioned to benefit from a slide in Adani shares”. In its scathing report, Hindenburg had also said that it holds short positions in the Adani companies through US-traded bonds and non-Indian-traded derivatives, along with other non-Indian-traded reference securities. 

Short selling is a trading strategy in which an investor borrows shares of a stock and sells them, with the expectation that the price will drop. The investor can then buy the shares back at the lower price, return them to the lender, and keep the difference as profit. This is a more advanced trading strategy and carries more risk than traditional “long” buying of stocks.

Calling the report an “intentional and reckless attempt by a foreign entity to mislead the investor community and the general public”, Adani Group said that it was deeply disturbed by the Hindenburg report. It also said that Hindenburg intends to undermine the goodwill and reputation of the Adani Group and its leaders in order to sabotage the upcoming Follow-on Public Offering (FPO). 

“We are evaluating the relevant provisions under US and Indian laws for remedial and punitive action against Hindenburg Research,” it said.In an earlier response to the report, Adani Group had said that the Hindenburg report was a malicious attempt to damage the upcoming FPO. “The investor community has always reposed faith in the Adani Group on the basis of detailed analysis and reports prepared by financial experts and leading national and international credit rating agencies. Our informed and knowledgeable investors are not influenced by one-sided, motivated and unsubstantiated reports with vested interests,” it had said. 

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