Adani Group faces $9b loss after Hindenburg's latest regulator accusations

Adani Group companies shed as much as $19 billion in market value on Monday but recovered much of the losses after Hindenburg Research accused the head of India's market regulator probing the group of having links to offshore funds also used by Adani.

In morning trade, the group's flagship firm Adani Enterprises (ADEL.NS), opens new tab fell 2%, while Adani Ports (APSE.NS), opens new tab, Adani Total Gas (ADAG.NS), opens new tab, Adani Green (ADNA.NS), opens new tab, Adani Power (ADAN.NS), opens new tab, Adani Wilmar (ADAW.NS), opens new tab and Adani Energy Solutions (ADAI.NS), opens new tab fell between 2% and 4.5%.

Adani Enterprises and Adani Ports were among biggest losers on the blue-chip Nifty 50 index (.NSEI), opens new tab, which reversed course from early losses to last trade up 0.4%. Total losses in morning trade fell to $9 billion after the early plunge.

"The allegations are coming for the second time. Lot of investigations have happened over the last year and a half. This is a temporary, knee-jerk reaction. Things will get back to normalcy," said Sunny Agrawal, head of fundamental equity research at SBICAPS Securities.

Citing whistleblower documents, Hindenburg said on Saturday that Securities and Exchange Board of India (SEBI) Chair Madhabi Puri Buch and her husband held stakes in an offshore fund where a substantial amount of money was invested by associates of Vinod Adani, brother of Gautam Adani, the group's billionaire founder.

Buch said the report's allegations were baseless. Adani rejected the allegations on Sunday and said its overseas holding structure was fully transparent.

The SEBI asked investors on Sunday to remain calm and exercise due diligence before reacting to such reports.

Hindenburg had in January 2023 alleged improper use of tax havens and stock manipulation by the Adani Group, which led to a $150 billion stock rout. Adani Group has denied all of those allegations and shares have partially recovered.

The 2023 report also led to an inquiry by the regulator Buch heads, which is still underway.

"We do not think SEBI can be trusted as an objective arbiter in the Adani matter," Hindenburg said on Saturday.

The allegations made by Hindenburg Research, against the Adani Group, have been duly investigated, SEBI said on Sunday.

The latest allegations against Buch have unnerved retail investors, analysts said.

"We will likely see a short to medium term sentiment impact on Adani stocks, especially as retail investors are pressurized by the allegations made against SEBI," said Kranthi Bathini, Director, Equity Strategy, WealthMills Securities.

The allegations have also gained political traction, with India's opposition leader Rahul Gandhi saying on X: "The integrity of SEBI, the securities regulator entrusted with safeguarding the wealth of small retail investors, has been gravely compromised by the allegations against its chairperson."

Ajay Seth, India's economic affairs secretary, said on Monday that "the regulator and the concerned person have made a statement. The government has nothing further to add."