The India Rising story hit some turbulence last week, as one of its biggest corporate success stories, the Adani Group, was hit with a report from Hindenburg Research, an investing group that specializes in targeting and shorting companies that it believes have dubious accounting and business practices. In response, people have fallen into two groups, with the Adani family and its supporters arguing that the short selling report is a hit job by a "foreign" entity to bring down not just the company, but also the country, and others noting that the report just reinforces what has troubled them about the company's meteoric rise in the last decade. I will confess that I know very little about the Adani Group, and I have nothing invested financially or emotionally in the company's fortunes. If you are looking for advice on whether you should buy or sell Adani shares, based upon my analysis, you will be disappointed. Instead, I will argue that the ingredients that led to the Adani stock price meltdown last week, which include an ambitious family group obsessed with control, a financial market where trading momentum trumps financial fundamentals and a capital market (debt and equity) where governments and regulators put their thumbs on the scale, are embedded in many Indian companies, and represent the weakest links in the India story.
Great insight Sir! Could you please give an analysis on AWL specifically as it is a "market leader in edible oil business" and more importantly the wild swing of the share price since IPO and low debt. Thank you!
Your write-up of the Adani valuation is premised on the reported numbers being reliable. Hindenburg's entire emphasis is to the contrary. Adanis are likely inflating their costs - pocketing the excess overseas and rerouting it as 'public' investments in their companies. The Indian exchequer and non-promoter stockholders are ripped off. That I suppose is why Hindenburg feels it apt to use phrases like 'largest con' and 'systematic loot'. But of course, I could be wrong.
"I have likened buying shares in a family group company to getting married, and then having all of your in-laws move into the bedroom with you." 😂🤣😂🤣 🤘
Great insight Sir! Could you please give an analysis on AWL specifically as it is a "market leader in edible oil business" and more importantly the wild swing of the share price since IPO and low debt. Thank you!
Your write-up of the Adani valuation is premised on the reported numbers being reliable. Hindenburg's entire emphasis is to the contrary. Adanis are likely inflating their costs - pocketing the excess overseas and rerouting it as 'public' investments in their companies. The Indian exchequer and non-promoter stockholders are ripped off. That I suppose is why Hindenburg feels it apt to use phrases like 'largest con' and 'systematic loot'. But of course, I could be wrong.
"I have likened buying shares in a family group company to getting married, and then having all of your in-laws move into the bedroom with you." 😂🤣😂🤣 🤘
Thanks a lot for this blog. It helped me understand the situation better.