May 16, 2024

How major analysts reacted to the Hindenburg Report Adani?

4 min read
How major analysts reacted to the Hindenburg Report Adani

In a new status report submitted to the Supreme Court, market watchdog Securities and Exchange Board of India (SEBI) informed the court that out of 24 probes resulting from the Hindenburg report Adani, 22 are final, and 2 are interim. According to SEBI, based on the outcomes of the investigations, it will act correctly and by the law in many ways. SEBI claimed it was looking for information from other authorities in two probes.

It investigated 13 Adani Group transactions for possible violations of the related-party transaction rules. The agency noted that its investigation into some offshore activities involved information on 12 foreign portfolio investors (FPIs) who were public shareholders in Adani Group firms. It has asked representatives from five different countries for data on FPIs.

Supreme Court established panel dismissed worries about systemic risk in the equities highlighted in the Hindenburg report Adani

After the Supreme Court appointed panel found no regulatory violation and disregarded worries about systemic risk in the stocks following the Hindenburg report Adani Research study, shares of Adani Group companies surged on Monday, continuing the rally. BQ Prime statistics show that the conglomerate’s market capitalization has surpassed Rs 10 lakh crore at Rs 10,17,685 crore. That was the most significant level since the group’s worth dropped following the publication of the Hindenburg Research report on January 24.

The panel’s report stated, “The events related to Adani Group companies did not have any significant impact at the systemic level.” Justice Abhay Manohar Sapre served as the panel’s chairman. According to Avinash Goraskshakar, director of Research Profitmart Securities, who told BQ Prime that this is a “big sentiment booster” for the company, the Adani Group may now focus on growth objectives in an “aggressive way.”

The long-running issue has been ultimately resolved in favor of the Adani Group by handing them a clean chit in the most recent Supreme Court committee report on the Hindenburg report Adani. On May 13, the group’s two most prominent companies, Adani Transmission Ltd. and Adani Enterprises Ltd., approved funding Rs 12,500 crore and Rs 8,500 crore through qualified institutional placement. Financial solid results from each company in the Adani Group are required to increase market confidence further.

Deleveraging strengthens the company’s position

Vinit Bolinjkar, head of research at Ventura Securities, believes that valuations and the deleveraging initiatives implemented over the past few months following the publication of the Hindenburg report Adani have placed the company on a solid foundation. “The stocks should increase now and in the future.” Following the SEBI report, which is anticipated to be submitted by August 15, the investors expected to “start nibbling” on the stocks and guarantee complete allocation.

The conclusions (of the panel’s study, which the Supreme Court appointed) make it abundantly evident that the charges were wholly unfounded and that there was no proof of any price manipulation occurring. The information disclosed by FPIs was timely and compliant with the law, and disclosures broke no restrictions. Bolinjkar emphasized that the report’s conclusion will boost the Adani Group since it “restores their credibility” and “is a thumbs up to the corporate governance practices” of the organization.

Additionally, it will increase institutional investors’ faith in the Adani Group’s stock. This report will enable the Adani Group to raise debt and growth capital, which is essential for a company with aggressive growth aspirations. For risk-adjusted returns and growth considerations, the top Adani stock picks from Ventura Securities are as follows:

  • Adani Ports and Special Economic Zone Ltd.
  • Adani Total Gas Ltd.
  • Adani Enterprises Ltd.
  • Adani Transmission Ltd. Ambuja Cements Ltd.
  • ACC Ltd.
  • Adani Power Ltd.
  • Adani Green Energy Ltd.

Report Dispels Several Concerns

According to Deepak Jasani, head of retail research at HDFC, the Supreme Court’s “clean chit” ruling on the Hindenburg report against the Adani Group on May 19, 2023, has “removed quite a few concerns on the group’s dealings.” In the near term, this “may help the group raise funds by QIP,” he said. According to Jasani, some investors are still waiting for the SEBI report.

He does, however, caution that the “knee-jerk upward reaction” in the group’s stock prices “may not last beyond one or two days.”

The fundamentals of the Adani Group are strong

Deven Choksey, managing director at KRChoksey Shares and Securities, asserts that the Adani Group’s fundamentals are still solid. As far as we know, the allegations in the Hindenburg report Adani have not significantly impacted the group’s growth plans. If at all, he continued, the group will gauge its expansion about equity as opposed to debt.

Gautam Adani said that as a regulator, the Securities and Exchange Board of India may want to strike an arrangement with their overseas counterparts to bring under their jurisdiction the regulations pertaining (to) overseas fundraising instruments, including listing India-listed stocks when they trade in overseas markets. This would stop the “repeat of manipulations/short selling.” According to him, it is crucial to develop such legislation so that investors’ faith is always safeguarded.

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