Hindenburg Research welcomes legal action from Adani; has long list of documents to demand in discovery [details]

If Adani Group sues the short seller in the US for its report on the Indian conglomerate, Hindenburg Research said on Thursday that it will request documents as part of the legal discovery process. The company fully stands by their findings, and any legal action taken against them will be "meritless," according to the statement. To be clear, we would welcome any legal action threatened by the corporation, the US-based short seller added.

Hindenburg Research said, "In the 36 hours since we released our report, Adani hasn't addressed a single substantive issue we raised. At the conclusion of our report, we asked 88 straightforward questions that we believe give the company a chance to be transparent. Thus far, Adani has answered none of these questions." It further went on to add, "If Adani is serious, it should also file suit in the US where we operate. We have a long list of documents we would demand in a legal discovery process."

The Adani Group, headed by Gautam Adani, the third-richest person in the world, is allegedly engaged in extensive and "brazen stock manipulation" and "accounting fraud scheme," according to Hindenburg Research. The business is "performing the biggest fraud in corporate history," according to the statement.

Key listed companies in the Adani Group, according to Reuters, have "significant debt," putting the entire group on "precarious financial footing." As a result of what it called "sky-high valuations," it also claimed that seven Adani-listed firms have an 85% downside on a fundamental basis. Hindenburg's report said five of seven key listed Adani companies have reported current ratios – a measure of liquid assets minus near-term liabilities – below 1. This, the short seller said, suggested "a heightened short-term liquidity risk", the news agency said.

Adani Group, however, stated in a statement issued on January 25 that it was "shocked" that the research had been released without the business being consulted."The report is a malicious combination of selective misinformation and stale, baseless and discredited allegations that have been tested and rejected by India's highest court," it added.

In August 2022, research company CreditSights raised a warning flag on the Adani Group's thirst for expansion backed by debt. Even if some of the numbers were eventually updated, the concern over the group's overall debt levels remained.