The rout in stock prices of the mining-to-port Adani Group continued on the eighth day on Monday, crashing up to 10 percent, wiping out another over $6 billion from stakeholders’ wealth.
The group belonging to the billionaire Indian businessman Gautam Adani was facing market ire following the release of the explosive report by Hindenburg Research on January 24.
Out of 10 Adani stocks, six were locked in their lower circuit limits in the morning trading hours on the Mumbai stock exchange.
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The total loss in market capitalisation of all these 10 stocks in Monday morning session is estimated to be more than $6 billion (₹500 billion), totalling a whopping loss of over $133 billion loss in the last eight trading sessions.
The embattled group was also forced to call off its flagship Adani Enterprises’ $2.45 billion FPO due to the market rout.
Media reports in India suggested that the share price of Adani Enterprises is still priced too high, even if one considers the allegations made in the Hindenburg report as incorrect.
A detailed calculation shared by the US-based valuation guru Aswath Damodaran, a finance professor, in his blog showed that the stock’s fair value should be around $11.46 (₹945) per share without factoring any of the Hindenburg accusations of fraud and malfeasance.
“Even with the share price at $1,531 per share, I still think the company is priced too high, given its fundamentals – cash flows, growth and risk – and before factoring the damage that might have done to the company’s reputation and long-term value, by this short selling episode,” Damodaran said, according to a report in the Economic Times.
After Finance Minister Nirmala Sitharaman said on Saturday that the regulators are independent and will take their own actions with regard to Adani Group concerns, India’s market watchdog SEBI issued a statement saying surveillance measures to address excessive volatility are in place.
“As part of its mandate, SEBI seeks to maintain orderly and efficient functioning of the market and has put in place a set of well-defined, publicly available surveillance measures, including the ASM framework, to address excessive volatility in specific stocks,” SEBI said.
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