Oh, the humanity!
A short-seller’s report could cause one of India’s most prominent corporate airships to crash and burn.
Last week, the drolly named Hindenburg Research, a short-selling activist investor, published a report on the Adani Group, a prominent Indian conglomerate, alleging fraud. Their 35,000-word report came after two years of investigation and laid out how they reckon Gautam Adani, the founder and boss, and his family have conned investors. Hindenburg says the Adani family manipulated the market and lied about accounts to boost the price of companies they own.
In response, the Adani Group released a 413-page document saying Hindenburg, not Adani, was trying to manipulate the market to profit from their short positions.
Whichever way you slice it, investors have overvalued Adani companies. The major public holding company within the group, Adani Enterprises, has a normalised price-earnings (PE) ratio of almost 300—meaning if bosses paid out all the company's usual annual profits to investors, it would take three centuries for them to recou…