Adani Group Issue 'Overblown' By Hindenburg, Says Mark Mobius
Mobius says the Adani Group has incredible assets even as debt remains a concern.
The Hindenburg Research had "overblown" the Adani Group issue, according to veteran emerging market investor Mark Mobius.
"My feeling is that probably the whole thing about Adani was overblown by the Hindenburg Group, where perhaps they have their reasons. If you're shorting stock, you want all the bad news to come out. But I don't think the reports by Hindenburg were completely accurate," the founder of Mobius Capital said, in an interview with Business Today TV on Monday.
"There's no question that the Adani Group has some incredible assets and that some of these assets are quite irreplaceable; they're quite valuable going forward," he said. "The problem with Adani, of course, was the debt; the debt levels were too high."
Hindenburg Research had alleged in a report on Jan. 24 that the Adani Group has high levels of debt and was involved in stock manipulation. The conglomerate refuted the allegations as "misinformation" and a "calculated attack on India".
This report came days before Adani Enterprises Ltd. launched its Rs 20,000-crore follow-on public offer, causing the listed stocks of Adani Group to nosedive. The group decided not to go ahead with the FPO as the share price slipped below the offer price.
'Not Investing Due To Size, Debt'
One of the reasons why Mobius Capital stayed away from Adani Group companies was because of this high debt, Mobius said. Another reason is the size of the company, he said.
"Actually, they're a little bit too big for us. We tend to focus on smaller companies, medium-sized companies," said Mobius. "And we have a pretty strict rule; we don't want companies with high debt. If a debt-equity is higher than 50%, we don't invest."
Disclaimer: AMG Media Networks Ltd., a subsidiary of Adani Enterprises Ltd., holds 49% stake in Quintillion Business Media Ltd., the owner of BQ Prime.
