Will you buy Adani Group?

Adani Group…

Adani Group companies continue to slide for a third straight session. $6 billion gone in a day.

India is the second most populated country in the world right now, and possibly one of the superpowers in the future. That being said, India is home to many of the world’s brilliant entrepreneurs, engineers and technologists.

Recently, there is growing criticism of India’s elite businessmen and politicians. Throughout the recent 10 years, 1,668 journalists have been killed in connection with their work. Furthermore, India is 1 of the 15 most dangerous countries for the press.

So what exactly happened?

This all happened when Hindenburg Research released a short report “Adani Group: How The World’s 3rd Richest Man is Pulling the Largest Con in Corporate History”. Since then, Adani Group has lost over $100 billion in market cap. 

Short Report – where a prominent investors/research firm publishes a report where they bet against the firm stock price. In short, they are betting that the company share price will drastically drop.

What is in the report?

TLDR; Hindenburg Research believe that Adani Group has been able to operate a massive, flagrant fraud in broad daylight because investors, journalists, citizens and even politicians have been afraid to speak out about the obvious, for fear of reprisal.

Adani Debt Strategy and Free Cash Flow

adanti net debt/ebitda and free cash flow
Source: FactSet

They challenged the way Adani utilized its debt strategy which could bring danger to creditors. Furthermore, they pointed out the lack of free cash flow the adani group has which is worrying. 

Family Members

Hindenburg Research highlighted that the group’s very top ranks and 8 of 22 key leaders are Adani family members, a dynamic that places control of the group’s financials and key decisions in the hands of a few.

Gautam Adani’s younger brother, Rajesh Adani

Rajesh Adani was accused by the Directorate of Revenue Intelligence (DRI) of playing a central role in the diamond trading import/export scheme around 2004-2005. This alleged scheme involved the use of offshore shell entities to generate artificial turnover.

Gautam Adani’s brother-in-law, Samir Vora

Samir Vora was also accused by the DRI of being a ringleader of the same diamond trading scam and repeatedly made false statements to regulators. Moreover, he was soon promoted to Executive Director of Adani Australia division.

Gautam Adani’s elder brother, Vinod Adani

Hindenburg Research also claim that Vinod Adani is found regularly at the center of the government’s investigations in managing a network of offshore entities used to facilitate fraud.

Shell Companies

This is the biggest red flag which Hindenburg Research has pointed out. Hindenburg Research also claimed to have identified 38 Mauritius shell entities controlled by The Adanis Group which are based in UAE, Singapore and several Caribbean Islands. These are places where they have conducted Money Laundering and siphoned off the money.

suspicious Mauritius investors
Source: Hindenburg Research

5 of these funds are almost entirely exposed to Adani stocks. This is indeed quite suspicious as many funds tend to diversify their holdings and not invest solely into a particular group due to concentration risk. 

A familiar name is in the mix – Amicorp.

Amicorp was once a company that played a key role in the $4.5 billion 1MDB Fraud Scandal. Adani Group has a deep relationship with Amicorp of which they have used them over 20 times. In the areas of, promotor entities, dissolved shells and another 3 opaque Mauritius funds.


The audit partners at Shah Dhandharia who signed off on Adani Enterprises and Adani Total Gas’ annual audits were very young. These auditors previously were as 23 and 24 years old when they began approving the audits. Of course, these auditors just graduated fresh out of school. Thus, they may not have the “voice” to scrutinize the financial accounts of the largest companies in the country. They might be afraid to voice out as well due to the nature of the individuals in the companies.

Hindenburg Track Record

Perhaps the other famous report was back in 2020, Nikola. Hindenburg mentioned Nikola made misleading claims to ink partnerships with top auto companies. This is to catch up with pioneers of the industry.

Hindenburg did indeed make a right analysis of their short report. In late 2021, Nikola agreed to pay $125 million to settle charges with the US Securities and Exchange Commission (SEC). This had defrauded investors by leading them about its products and technology.

Hindenburg left Adani with questions

Hindenburg Research left the Adani group with 88 questions. They also further mentioned that “A system is broken when corporate behemoths like Adani Group seem able run an intricate fraud in broad daylight.”. 

hindenburg 88 questions for adani group
Some of the questions asked

Our Stand

There are definitely some fair points which Hindenburg Research have brought up and they’re definitely not the sole side of the story, I believe. With the India market having a higher valuation compared to other markets, it could be a good thing for the market where the broader market valuation gets cheaper as well before a bull rally continues after.

Having said that, we are not sure what Hindenburg Research valued Adani Group at and when they will cover their short position. Even so, they did definitely nail their main objective which is to short the stock – it did fell over 60% since the release of the report. 

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