The Recent Debacle

 Adani Group has been on the radar since they announced the 20000 crores FPO from Adani Enterprises. Since then, there have been a lot of developments in the Adani Group. The First Development was the report written by a US Short Seller Hindenberg. The report stated that its two-year investigation revealed that Adani Group has engaged in a brazen stock manipulation and accounting fraud scheme over the course of decades. Adani responded by saying that it will file a law suit against the report. Hindenberg responded saying that they will ask for documents of the company and will need an answer to 88 straight forward questions that they have asked at the end of their report. After this development, Credit Suisse and Citigroup both withdrew giving out loans on Adani Shares and Bonds. This gave a huge effect on the stocks of Adani Group in matter of a week. (See below image which shows the fall of the stocks in last 1 week from 2nd Feb, 2023).

As I am a Fundamental Investor, I was wondering about the valuations these companies of the Adani Group held. So that gave me an idea to compare the Price Growth of the Adani Companies since the Biggest Fall of March 2020 and their Revenue/Profit Growth in those years. (See table below)



The above table clearly shows that the companies were valued too high as compared too their real company growth. The amount of debt that they have is too high as compared to the Net Cash Flow in the last 1 year. Now that the market has started to understand that these companies are highly valued, people have started selling the stock in huge amounts. Thus, the fall in their stocks. I think this is just the start and there will be a deeper correction.

Disclaimer: This post is only for information purpose and I do not have any holdings in any of the Adani Companies. The objective is not to hurt any sentiments or be biased in favour of or against the Group.

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