Adani-Hindenburg: Aswath Damodaran Sees No Corruption, Disagrees With Short-Seller's Charges On SEBI Delays

Regulators in India face challenges making timely decisions, said renowned valuation expert Aswath Damodaran. He recently spoke on the recent criticisms directed at India's markets regulator, in light of the Hindenburg report on the Adani Group.

"There were lags because in India when you’re a bureaucrat, you get no upside from making decisions, you get a downside when you take the decision and it goes wrong. So what do they do? They just delay it. In the old days, they would just take a big stack of files and send it to the next highest person. Now variation of the same is happening," he said in an interview with ET BFSI.

This risk aversion is the primary reason for perceived delays, rather than any form of corruption, Damodaran said.

The discussion turned to the Adani Group's financial situation, particularly in light of the controversial Hindenburg report that alleged financial irregularities. Damodaran disagreed with the notion that the entire Adani group lacks value. "The Adani Group is a competent infrastructure company in the country, which is in massive need of infrastructure. The story of Adani is part of India’s story and the fact is that Adani supplies infrastructure."

He acknowledged the complexities of the group's debt structure, asserting that while high debt levels are a concern, the nature of infrastructure projects—often characterised by stable cash flows—can mitigate bankruptcy risks. "Infrastructure companies around the globe tend to borrow more than many other companies because of their characteristics," Damodaran said.

Many startups have been raising significant funds, yet struggle to generate lasting value, he noted. He called for startups to shift focus from merely creating software solutions to tackling genuine problems, particularly in healthcare and other essential services. "There is a huge need for great businesses in the healthcare space. Because Indians are more prosperous now than they were 20 years ago and they will need health care. Startups should also go into non seductive businesses," he said.

Damodaran also discussed challenges banks face in maintaining margins amid increased competition and changing consumer behavior. Banks must balance their portfolios carefully and not shy away from lending to higher-risk borrowers, as long as they have adequate regulatory capital to absorb potential losses, he said.

Disclaimer: NDTV Profit is a subsidiary of AMG Media Networks Limited, an Adani Group Company.