Explained | Adani Group stocks: What is Hindenburg Research, and how does a short seller operate? Premium

This is not the first time Hindenburg Research has highlighted financial irregularities in a popular company.

The story so far: U.S.-based short seller Hindenburg Research has hit back at Gujarat-based Adani Group and accused the conglomerate of “holding back India’s future”. Stocks of Adani Group tumbled last Wednesday after Hindenburg Research published a report titled Adani Group: How The World’s 3rd Richest Man Is Pulling The Largest Con In Corporate History, following a two-year investigation, and raised concerns about its “substantial debt”. The financial researcher and short seller also accused the conglomerate of stock manipulation and fraud over decades.

“The timing of the report’s publication clearly betrays a brazen, mala fide intention to undermine the Adani Group’s reputation with the principal objective of damaging the upcoming Follow-on Public Offering (FPO) from Adani Enterprises,” Group CFO Jugeshinder Singh said in a statement after the report was first published.

Following the report, Adani Group said it was mulling legal action against Hindenburg Research – a move that was welcomed by the financial researcher.

On January 29, the conglomerate published a 413-page rebuttal to the allegations levelled by Hindenburg Research, claiming it to be a “calculated attack on India”. “We will exercise our rights to pursue remedies to safeguard our stakeholders before all appropriate authorities and we reserve our rights to respond further to any of the allegations or contents of the Hindenburg report,” the group said.

Also Read | Warning bells: On the Adani saga

In response, Hindenburg Research said that fraud cannot be “obfuscated by nationalism”. “Adani Group has attempted to conflate its meteoric rise and the wealth of its Chairman, Gautam Adani, with the success of India itself. We disagree. To be clear, we believe India is a vibrant democracy and an emerging superpower with an exciting future,” the researcher said in a statement.

Shares of flagship Adani Enterprises rebounded and rose about 9.5% on January 30 but those of other companies of the Adani Group continued to plunge, further extending their losses.