According to Bloomberg Economics, The dramatic fall in the Adani Group’s stocks after allegations by Hindenburg Research is unlikely to spill over to other Indian companies as they fare well on key business parameters.
A Break-even analysis of governance, liquidity, and leverage circumstances at India's top 17 business houses found that the majority of large corporations, including Reliance Industries Ltd. and the Tata Group, performed better than Adani Group.
Adani is an exception and not a reflection of India Inc "According to the analysis released on Tuesday by economists Tom Orlik, Scott Johnson, and Abhishek Gupta. "India's conglomerates are still not on par with international giants like Apple and Tesla. But none of them is about to crumble under the weight of bad government."
In its analysis from January 24, short seller Hindenburg Research accused Gautam Adani of accounting fraud and stock manipulation. This led to a stock crash at the billionaire empire and the loss of $127 billion in market value. Adani has consistently refuted the charges.
The economists claimed that because there is a small percentage of openly tradable shares, the founders have too much control over the company, which has resulted in high valuations. They said that it has one of the lowest liquidity ratios among rivals.
Adani Enterprises Ltd., its flagship company, is only covered by two analysts, compared to an average of 33 for the 50 largest firms, according to the research. Despite having a high level of leverage in comparison to its peers, the business claims that its profits are enough to cover interest costs.
India's reputation as a source of international investment and a global growth engine has come under scrutiny due to the crisis. The free float of four Adani-owned companies was slashed earlier this month by MSCI, and the outlook for Adani Green Energy and three other group companies was lowered by Moody's Investors Service.
"The narrative on India Inc. probably won't be dominated by short sellers in the years to come, "added the economists. With India's GDP expected to do better than expected once more, the nation's businesses will have the chance to advance one step closer to becoming global majors."
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