US-based short-seller Hindenburg Research’s report on the finances and valuation of Adani companies has brought to a halt the meteoric rise in the fortunes of group firms on the bourses. The Adani group has lost more than a quarter of its combined market capitalisation (m-cap) since the publication of the report on Wednesday; it has fallen behind the Mukesh Ambani group in the m-cap league table.
The combined m-cap of the 10 listed Adani firms declined sharply to Rs 15.02 trillion on Friday, from Rs 19.20 trillion on Tuesday —the day before the publication of the Hindenburg Research report. In comparison, the combined m-cap of 10 Mukesh Ambani group companies, including Reliance Industries, is down 3.21 per cent to Rs 16.09 trillion on Friday, from Rs 16.63 trillion on Tuesday. The Tata group remains at the top with a group m-cap of Rs 21.6 trillion on Friday, marginally down from Rs 21.74 trillion on Tuesday.
In August last year, the Adani group overtook the Mukesh Ambani group in m-cap terms.
A sharp decline in Adani group stocks in the past two trading sessions is in contrast with a relatively resilient showing by other big family-owned business groups on the bourses. For example, the combined m-cap of the Rahul Bajaj group is down just 0.24 per cent in the past two days, while AV Birla group companies together have lost just Rs 9,000 crore worth of m-cap since Tuesday — a 1.9 per cent decline. This excludes the numbers of Vodafone Idea.
A meltdown in Adani stocks in the past two trading sessions signals a reversal in the fortunes of the group, which has been the biggest gainer in the post-pandemic rally.
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The combined m-cap of Adani group companies was up 66 per cent during the 2022 calendar year; the group gained 82.8 per cent in CY22 if we add the listing of Adani Wilmar and the acquisition of Ambuja Cement, ACC, and New Delhi Television. The group ended CY22 with a market value of Rs 21.3 trillion, up from Rs 11.64 trillion at the end of December 2022. The group bought Holcim India assets in May last year and acquired NDTV from its promoters in November last year.
In all, the Adani group m-cap was up 419 per cent between January 2020 and December 2022, from Rs 4.1 trillion to Rs 21.3 trillion. After Friday’s fall, its m-cap is the lowest since March 2022.
In comparison, the Mukesh Ambani group combined m-cap was up 6.9 per cent in CY22, while the Sensex was up 4.4 per cent.
While all Adani group stocks have seen a sharp fall in share prices and m-cap in the past two trading sessions, the shareholders of Adani Transmission have suffered the most following a 27.1 per cent decline in m-cap. It is followed by Adani Total Gas, which is down 24.5 per cent, and Ambuja Cements (-23.5 per cent). The least impact has been on Adani Wilmar, NDTV, and Adani Power, each of which is down 9.7 per cent.
Adani slips 4 places on rich list
Gautam Adani dropped four places to become the world's seventh-richest person on Friday. The net worth Adani, the first-generation tycoon, dropped to $96.6 billion from $121 billion following the crash in his companies’ stock prices amid the controversy surrounding a scathing report by American short-seller Hindenburg Research, according to Forbes. The Adani group has denied the allegations.