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Published: Feb 25, 2023
Updated: Feb 25, 2023

Adani Group Suffers Massive Market Cap Erosion a Month After Hindenburg Report

The Adani Group stocks continue to struggle a month after the release of the Hindenburg Report, which alleged irregularities in the group. The stocks have lost an average of Rs 52,343 crore each day since the report was made public on January 24, leading to the biggest-ever wipeout of wealth globally. The conglomerate's market capitalisation has declined by 63%, or Rs 12.05 trillion ($145 billion), from Rs 19.2 trillion in just one month. The group's founder Gautam Adani's ranking on the Bloomberg Billionaires Index has also slipped from number 4 to number 29.

Market Cap Erosion

The Adani Group's total m-cap has declined to Rs 7.16 trillion, making it the fourth biggest after the Tata group, Reliance and the Rahul Bajaj group. Before the Hindenburg report, the Adani Group ranked number two. This massive erosion of market capitalisation has also impacted India's m-cap, which has fallen by Rs 20.4 trillion from Rs 280.4 trillion to Rs 260 trillion. The country's ranking on the global m-cap league table has also fallen from five to seven.

Impact on Investors

The fall in the Adani Group stocks has impacted the average investor on the street. Insurance major Life Insurance Corporation's total purchase value of Adani Group stocks has declined from Rs 30,127 to around Rs 25,000 crore. In comparison, domestic mutual funds had limited exposure to the firm's stocks. Most of it is through index funds and exchange-traded funds linked to the Nifty 50 and Nifty Next 50 index. Retail investors held between 1% and 11% in the 10 Adani Group stocks.

Adani Group's Position in the Market

Adani Enterprises and Adani Ports & SEZ are down 62% and 27%, respectively, since January 24. Both stocks are part of Nifty 50 index, which is tracked by funds with assets under management of over Rs 2 trillion. Although both stocks now have a combined weighting of less than 2%.

Biggest ever wipeout of wealth globally

The Hindenburg Report has had a severe impact on the Adani Group's market capitalisation, causing the biggest-ever wipeout of wealth globally. The group's stocks have lost an average of Rs 52,343 crore each day since the report's release, resulting in a decline of 63%, or Rs 12.05 trillion ($145 billion), from Rs 19.2 trillion in just one month. The fall in the Adani Group stocks has also impacted India's m-cap, which has fallen by Rs 20.4 trillion, and the country's ranking on the global m-cap league table has also fallen.