by NEW DELHI (Reuters) – Shares in India’s Adani Enterprises rose 6% on Monday, offsetting initial gains, but several other Adani group companies plunged for a third straight day despite a detailed rebuttal by the group of a US short’s criticism seller.
Adani, led by Asia’s richest man Gautam Adani, has locked horns with Hindenburg Research, responding on Sunday to last week’s short-seller report raising concerns about debt levels and the use of tax havens. Adani said it complies with all local laws and has made necessary disclosures.
On Monday, the group’s flagship Adani Enterprises was trading at 2,926 rupees in early trading as the critical secondary share sale of $2.5 billion entered its second day.
That is still below the share sale price range – Adani has set a floor price of 3,112 rupees per share and a limit of 3,276 rupees. On Friday, the first day of the offer, the offering was subscribed at 1% amid a broader drop in shares.
Indian regulations say that the share issue must receive a minimum subscription of 90%, and if not, the issuer must refund the full amount. Maybank Securities and Abu Dhabi Investment Authority are among the investors bidding for the anchor portion of the offering.
Adani Group told Reuters in a statement on Saturday that the sale remains on track at the planned issue price, even though sources said bankers of the country’s largest secondary share sale were considering extending the timeline beyond Jan. 31, or adjusting the price due to the fall in its share price.
Adani Ports and Special Economic Zone were up 5%, but other Adani stocks remained under pressure. Adani Transmission was down 17%, Adani Total Gas plummeted 20% and Adani Green Energy was down 13%.
The Hindenburg report led to a $48 billion destruction in seven publicly traded Adani group companies last week. On Monday, in response to Adani’s refutation, Hindeburg said the “answer largely confirmed our findings and ignored our key questions.”
The stock market collapse was a dramatic setback for 60-year-old Adani, a high school dropout who in recent years quickly rose to become the third richest man in the world before dropping to eighth on the Forbes list.
According to Hindenburg’s report, five of the top seven publicly traded Adani companies have reported current ratios, a measure of liquid assets minus short-term liabilities, of less than 1, suggesting “increased near-term liquidity risk,” the report said.
It said the main Adani listed companies had “considerable debts”, which has put the entire group in a “precarious financial position” and that shares in seven Adani listed companies have an 85% downside due to what it called “skyrocketing valuations” mentioned.
Adani’s reply on Sunday said that the group companies have “consistently cut de-levered” over the past decade.
(Reporting by Chris Thomas and Aditya Kalra; editing by Muralikumar Anantharaman)
