Embattled Indian billionaire Gautam Adani's ports-to-power conglomerate is still far from out of the woods, as it continues to grapple with the fallout of Hindenburg Research's allegations of fraud earlier this year, according to analysts.
But as investors await the delayed findings of the Securities and Exchange Board of India's (SEBI) investigation into the matter – which India's top court last Wednesday said had to be delivered by August 14 – it could finally bring some much-needed clarity to stock markets.
“The probe’s findings will have a major impact on both Adani Group and the market at large, in line with the situation we witnessed after the publishing of the Hindenburg report,” says Raghvendra Nath, managing director of Mumbai-based Ladderup Wealth Management.
“The impact could be either euphoric or disastrous, depending on the findings, and the market is keeping its eyes peeled.”
Watch: How India's Gautam Adani lost title as Asia's richest man
The Adani Group has been trying to manage the impact of US-based short-seller Hindenburg Research's report since it emerged in January, accusing one of India's largest conglomerates of fraud, stock market manipulation and improper use of tax havens.
The company has denied the allegations and has been actively trying to ease investor concerns since the report surfaced.
These efforts include overseas roadshows to reassure investors and it has reportedly invited bankers to tour its airports and ports next month to boost confidence.
Investors were rattled by Hindenburg's claims, which resulted in more than $150 billion being wiped off the market value of Adani companies by late February.
Those losses have since pared back, particularly after US investment company GQG Partners injected $1.87 billion into four Adani Group entities at the beginning of March.
“The group is trying re-establish its credibility by taking steps to restore the confidence of the investors,” says Jyoti Prakash Gadia, managing director of investment bank Resurgent India.
“It has repaid and prepaid some debts to deleverage the balance sheets and is trying to consolidate the group activities. Some of the major expansion plans have been deferred to ensure focus on the revival of the existing enterprise.”
However, these efforts have only had a limited effect due to the magnitude of the Hindenburg allegations, which also triggered a political row due to the ties between Mr Adani and Prime Minister Narendra Modi.
While “most of the group companies reported decent numbers in the fourth quarter, market participants do not look convinced that the performance can be sustained over longer periods”, says Manish Chowdhury, head of research at stockbroker Stoxbox.
“Moreover, sentiment remains sour as the group has faced multiple roadblocks since the Hindenburg allegations including an FPO [follow on public offer] withdrawal and regulatory scrutiny.”
As a result, the Adani Group still has a long way to go to a full recovery in its share prices.
The situation worsened last week, after two Adani Group entities – Adani Transmission and Adani Total Gas – were removed from the MSCI Global Standard Index amid concerns over a potential dilution from a fund-raising plan.
This led to more than $10 billion of the group's market value being wiped out by Friday morning.
Some relief came later in the day, when an expert panel appointed by India's Supreme Court to look into the allegations said that “prima facie, it would not be possible for the committee to conclude that there has been a regulatory failure around the allegation of price manipulation”.
The market regulator's surveillance system found “no coherent pattern of abusive trading”, the panel added.
This led to a rally in Adani Group stocks, with Adani Enterprises gaining 3.5 per cent on Friday and more than halving the company's losses for the week to $4.5 billion. However, Adani Transmission ended the week 11 per cent down.
Meanwhile, Goldman Sachs substantially reduced its exposure to the Adani Group in its environmental, social and governance portfolios following the Hindenburg report, according to Bloomberg data released last week.
In another development, market regulator SEBI sought a six-month extension from the Supreme Court to deliver the findings of its investigation after missing the original deadline of May 2.
The handling and response of the Supreme Court and SEBI to the Adani crisis is seen as a test of the country's institutions and financial and corporate governance practices, analysts say.
“Looking at the complexity of the transactions and the multiplicity of the stakeholders, including foreign investors, additional time was required to derive the exact position of non-compliance, if any,” says Mr Gadia.
“SEBI needs to go into the depth of all the transactions to arrive at the correct position relating to the violations or non-compliance, if any, of the prescribed rules, regulations, guidelines, and policies. It is hoped that the ultimate truth will emerge to provide clarity on the whole issue as early as possible.”
The Supreme Court's three-month extension for SEBI to finalise its investigation is a step in the right direction, Mr Chowdhury says.
“The investigation authorities would require to collate large amount of data and information for ascertaining the complex transactions and it is always advisable to have a thorough analysis before arriving at the right conclusion as it involves one of the largest corporates of India and multiple stakeholders,” he adds.
Looking at the complexity of the transactions and the multiplicity of the stakeholders, including foreign investors, additional time was required to derive the exact position of non-compliance, if any
Jyoti Prakash Gadia,
managing director of Resurgent India
Although some observers have raised questions about how much the probe will uncover, he says that SEBI's findings will prove critical and determine investor sentiment.
“The investigation would provide conclusive evidence of the Hindenburg allegations,” says Mr Chowdhury. “Any favourable outcome from the probe will definitely provide wings to the stocks to gain their previous highs.”
The regulator's investigation is likely to prove to be conclusive, says Niranjan Shastri, associate professor at the School of Business Management, NMIMS Indore.
“SEBI is an empowered independent regulator of capital markets and definitely findings of the SEBI in this matter will have lot of impact on bringing clarity,” says Mr Shastri.
“In my opinion, in comparison to any foreign research firm that is a so-called short seller too, SEBI's findings should be considered the more reliable one.”
Until the investigation is completed, the Adani Group will continue to face the challenge of raising funds for its operations and expansion plans.
“Because of the crises, Adani's spending speed has reduced drastically,” says Mr Shastri.
“No doubt, the Adani Group needs funding of at least 250 billion [Indian] rupees [$3 billion] in the very near term and recently the group companies are looking for it through a Qualified Institutional Placement.”
The boards of two Adani Group companies have approved proposals to raise up to $2.6 billion, in a move that triggered some concerns about possible equity dilution.
However, raising funds is a key part of the Adani Group's comeback strategy.
“As we can see, the Adani Group has had to face continuing pressure despite efforts to reassure investors and address outstanding debt,” says Mr Nath.
“However, the group seems to be going ahead full throttle.”
The company's fall from grace has been significant and its recovery will not happen overnight, Mr Nath adds.
“In the post-pandemic period, the Adani Group’s stocks enjoyed an unprecedented run, taking Gautam Adani to the position of third-richest person in the world,” says Mr Nath.
“The exponential rise in the stocks was considered a testament to the India growth story, but the Hindenburg report put a spanner in this expansion saga.”
However, as the story continues to unfold, Mr Nath says he “remains cautiously optimistic on the outlook for the group”.
Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
Jetour T1 specs
Engine: 2-litre turbocharged
Power: 254hp
Torque: 390Nm
Price: From Dh126,000
Available: Now
UAE currency: the story behind the money in your pockets
The specs
Engine: 2.0-litre 4cyl turbo
Power: 261hp at 5,500rpm
Torque: 405Nm at 1,750-3,500rpm
Transmission: 9-speed auto
Fuel consumption: 6.9L/100km
On sale: Now
Price: From Dh117,059
F1 The Movie
Starring: Brad Pitt, Damson Idris, Kerry Condon, Javier Bardem
Director: Joseph Kosinski
Rating: 4/5
Three ways to limit your social media use
Clinical psychologist, Dr Saliha Afridi at The Lighthouse Arabia suggests three easy things you can do every day to cut back on the time you spend online.
1. Put the social media app in a folder on the second or third screen of your phone so it has to remain a conscious decision to open, rather than something your fingers gravitate towards without consideration.
2. Schedule a time to use social media instead of consistently throughout the day. I recommend setting aside certain times of the day or week when you upload pictures or share information.
3. Take a mental snapshot rather than a photo on your phone. Instead of sharing it with your social world, try to absorb the moment, connect with your feeling, experience the moment with all five of your senses. You will have a memory of that moment more vividly and for far longer than if you take a picture of it.
THE BIO
Born: Mukalla, Yemen, 1979
Education: UAE University, Al Ain
Family: Married with two daughters: Asayel, 7, and Sara, 6
Favourite piece of music: Horse Dance by Naseer Shamma
Favourite book: Science and geology
Favourite place to travel to: Washington DC
Best advice you’ve ever been given: If you have a dream, you have to believe it, then you will see it.
UAE currency: the story behind the money in your pockets
What sanctions would be reimposed?
Under ‘snapback’, measures imposed on Iran by the UN Security Council in six resolutions would be restored, including:
- An arms embargo
- A ban on uranium enrichment and reprocessing
- A ban on launches and other activities with ballistic missiles capable of delivering nuclear weapons, as well as ballistic missile technology transfer and technical assistance
- A targeted global asset freeze and travel ban on Iranian individuals and entities
- Authorisation for countries to inspect Iran Air Cargo and Islamic Republic of Iran Shipping Lines cargoes for banned goods
UAE v Gibraltar
What: International friendly
When: 7pm kick off
Where: Rugby Park, Dubai Sports City
Admission: Free
Online: The match will be broadcast live on Dubai Exiles’ Facebook page
UAE squad: Lucas Waddington (Dubai Exiles), Gio Fourie (Exiles), Craig Nutt (Abu Dhabi Harlequins), Phil Brady (Harlequins), Daniel Perry (Dubai Hurricanes), Esekaia Dranibota (Harlequins), Matt Mills (Exiles), Jaen Botes (Exiles), Kristian Stinson (Exiles), Murray Reason (Abu Dhabi Saracens), Dave Knight (Hurricanes), Ross Samson (Jebel Ali Dragons), DuRandt Gerber (Exiles), Saki Naisau (Dragons), Andrew Powell (Hurricanes), Emosi Vacanau (Harlequins), Niko Volavola (Dragons), Matt Richards (Dragons), Luke Stevenson (Harlequins), Josh Ives (Dubai Sports City Eagles), Sean Stevens (Saracens), Thinus Steyn (Exiles)
Milestones on the road to union
1970
October 26: Bahrain withdraws from a proposal to create a federation of nine with the seven Trucial States and Qatar.
December: Ahmed Al Suwaidi visits New York to discuss potential UN membership.
1971
March 1: Alex Douglas Hume, Conservative foreign secretary confirms that Britain will leave the Gulf and “strongly supports” the creation of a Union of Arab Emirates.
July 12: Historic meeting at which Sheikh Zayed and Sheikh Rashid make a binding agreement to create what will become the UAE.
July 18: It is announced that the UAE will be formed from six emirates, with a proposed constitution signed. RAK is not yet part of the agreement.
August 6: The fifth anniversary of Sheikh Zayed becoming Ruler of Abu Dhabi, with official celebrations deferred until later in the year.
August 15: Bahrain becomes independent.
September 3: Qatar becomes independent.
November 23-25: Meeting with Sheikh Zayed and Sheikh Rashid and senior British officials to fix December 2 as date of creation of the UAE.
November 29: At 5.30pm Iranian forces seize the Greater and Lesser Tunbs by force.
November 30: Despite a power sharing agreement, Tehran takes full control of Abu Musa.
November 31: UK officials visit all six participating Emirates to formally end the Trucial States treaties
December 2: 11am, Dubai. New Supreme Council formally elects Sheikh Zayed as President. Treaty of Friendship signed with the UK. 11.30am. Flag raising ceremony at Union House and Al Manhal Palace in Abu Dhabi witnessed by Sheikh Khalifa, then Crown Prince of Abu Dhabi.
December 6: Arab League formally admits the UAE. The first British Ambassador presents his credentials to Sheikh Zayed.
December 9: UAE joins the United Nations.
Paris Can Wait
Dir: Eleanor Coppola
Starring: Alec Baldwin, Diane Lane, Arnaud Viard
Two stars
Conflict, drought, famine
Estimates of the number of deaths caused by the famine range from 400,000 to 1 million, according to a document prepared for the UK House of Lords in 2024.
It has been claimed that the policies of the Ethiopian government, which took control after deposing Emperor Haile Selassie in a military-led revolution in 1974, contributed to the scale of the famine.
Dr Miriam Bradley, senior lecturer in humanitarian studies at the University of Manchester, has argued that, by the early 1980s, “several government policies combined to cause, rather than prevent, a famine which lasted from 1983 to 1985. Mengistu’s government imposed Stalinist-model agricultural policies involving forced collectivisation and villagisation [relocation of communities into planned villages].
The West became aware of the catastrophe through a series of BBC News reports by journalist Michael Buerk in October 1984 describing a “biblical famine” and containing graphic images of thousands of people, including children, facing starvation.
Band Aid
Bob Geldof, singer with the Irish rock group The Boomtown Rats, formed Band Aid in response to the horrific images shown in the news broadcasts.
With Midge Ure of the band Ultravox, he wrote the hit charity single Do They Know it’s Christmas in December 1984, featuring a string of high-profile musicians.
Following the single’s success, the idea to stage a rock concert evolved.
Live Aid was a series of simultaneous concerts that took place at Wembley Stadium in London, John F Kennedy Stadium in Philadelphia, the US, and at various other venues across the world.
The combined event was broadcast to an estimated worldwide audience of 1.5 billion.
Specs
Engine: Dual-motor all-wheel-drive electric
Range: Up to 610km
Power: 905hp
Torque: 985Nm
Price: From Dh439,000
Available: Now
Director: Laxman Utekar
Cast: Vicky Kaushal, Akshaye Khanna, Diana Penty, Vineet Kumar Singh, Rashmika Mandanna
Rating: 1/5
SHAITTAN
%3Cp%3E%3Cstrong%3EDirector%3A%20%3C%2Fstrong%3EVikas%20Bahl%3Cbr%3E%3Cstrong%3EStarring%3A%20%3C%2Fstrong%3EAjay%20Devgn%2C%20R.%20Madhavan%2C%20Jyothika%2C%20Janaki%20Bodiwala%3Cbr%3E%3Cstrong%3ERating%3A%20%3C%2Fstrong%3E3%2F5%3C%2Fp%3E%0A
The Matrix Resurrections
Director: Lana Wachowski
Stars: Keanu Reeves, Carrie-Anne Moss, Jessica Henwick
Rating:****
The specs: 2018 Nissan 370Z Nismo
The specs: 2018 Nissan 370Z Nismo
Price, base / as tested: Dh182,178
Engine: 3.7-litre V6
Power: 350hp @ 7,400rpm
Torque: 374Nm @ 5,200rpm
Transmission: Seven-speed automatic
Fuel consumption, combined: 10.5L / 100km
The specs: 2019 Audi A7 Sportback
Price, base: Dh315,000
Engine: 3.0-litre V6
Transmission: Seven-speed automatic
Power: 335hp @ 5,000rpm
Torque: 500Nm @ 1,370rpm
Fuel economy 5.9L / 100km
The years Ramadan fell in May
