Meteoric rise to the topDiversification in businesses and concentration on sectors fundamental to the current Indian government’s development goals (such as infrastructure), aligned to establish his conglomerate’s stronghold. The company summarizes its visions as “growth with goodness” and aims to build assets of national relevance. According to analysts, Adani’s focus on capital-intensive businesses where there is less competition and rapid acquisitions across various sectors were big factors in the company’s growth. Most of these acquisitions were, however, considered to be debt funded. The stellar rise of his company’s stock prices, and the historic rise of the company’s market capitalization between 2020 and 2022 led financial analysts to question the valuations of some of his companies.
Hindenburg Research and its aftermathA U.S. short-seller Hindenburg Research’s allegations against Adani Group opened the Group’s business practices for a global discussion. The report claims to have uncovered evidence of stock manipulation, accounting fraud, and money laundering as part of what it calls the “largest con in corporate history.” In India, promoter shareholders are not allowed to hold more than 75 percent of a listed company. Hindenburg alleges that large stakes in the Adani group are held by offshore shell entities in places like Mauritius and Singapore, significantly inflating the Adani stock and boosting its ability to borrow or leverage.
The ripple effect of the report left the stock crashing in the Indian bourses. The allegations impacted investor confidence and eroded the market capitalization of nine Adani Group companies by 8.65 trillion Indian rupees (108 billion U.S. dollars) within six trading days. The Group while refuting all allegations in its 413-page response to the research firm's report called it “a calculated attack on India” and played down the concerns over its debt levels. The Group is determined to take a legal route against Hindenburg and called off a 2.5 billion U.S. dollar stock offering post the attack. India’s Supreme Court has set up a panel to investigate the allegations. Adani has welcomed the court order. As the events unfold, it is yet to be seen if the exposure of banks and financial institutions to Adani Group could have a significant impact on the Indian economy, now the fifth largest in the world.