Adani Ports Recoups All Stock Losses Since Hindenburg Report

(Bloomberg) -- Adani Group’s port unit became the first of its 10 entities to recoup all losses triggered by Hindenburg Research’s bombshell report in late January, as a recent rally in the conglomerate’s stocks gathered steam on Tuesday.

All 10 Adani stocks climbed in early Mumbai trading, with shares of Adani Ports and Special Economic Zone Ltd. surging as much as 7.7%. Flagship Adani Enterprises Ltd. soared almost 19% following a similar jump on Monday. The trigger for the rally since last Friday has been an Indian court panel’s report that found no conclusive evidence of stock-price manipulation as alleged by US short-seller Hindenburg.

The combined market value of 10 Adani stocks has surged about $22 billion since Thursday’s close. The value wipeout since Hindenburg’s report now stands at around $105 billion, down from as much as $153 billion at its worst.

The ports business houses some of billionaire Gautam Adani’s most lucrative assets and is touted by market watchers as the group’s crown jewel. It is also the most widely tracked Adani stock among sell-side analysts. At present, all 20 analysts covering the stock have a buy rating, data compiled by Bloomberg show.

Two US-currency bonds of Adani Ports maturing in 2027 rose by about 0.2 cents on the dollar on Tuesday. They are still trading 6% below the level before the Hindenburg report.

“Fundamentals of Adani Ports’ business have remained solid,” said Deven Choksey, managing director of KRChoksey Shares & Securities Pvt. in Mumbai. “Its strong cash-generating ability means that it will get the first priority among investors,” he said, adding that the stock remains under-owned by domestic institutional investors who generally prefer high cash-generating companies.

In a 173-page report released last week, the court panel said that based on the data from the markets regulator Securities and Exchange Board of India, or SEBI, it saw “no evident pattern of manipulation” in the steep stock-price rise in Adani’s companies that can be attributed to “any single entity or group of connected entities.”

This referred to a central allegation of Hindenburg, which claimed that offshore shell companies tied to Adani family were bidding up the empire’s shares. Still, the investigations are ongoing, and the regulator has been given time till August 14 by the court to close its probe.

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