Driving Naari Programme launched in Chandigarh
Aswath Damodaran, Professor of Finance at the Stern School of Business at New York University, said in a blog post that “it is possible that Hindenburg was indulging in hyperbole when it described Adani to be ‘the biggest con’ in history.”
He added that Adani, notwithstanding all of its flaws, is a competent player in a business (infrastructure), which, especially in India, is filled with frauds and incompetents.
“In sum, I am willing to believe that the Adani Group has played fast and loose with exchange listing rules, that it has used intra-party transactions to make itself look more credit-worthy than it truly is and that even if it has not manipulated its stock price directly, it has used the surge in its market capitalization to its advantage, especially when raising fresh capital,” he said.
Damodaran added, “As for the institutions involved, which include banks, regulatory authorities and LIC, I have learned not to attribute to venality or corruption that which can be attributed to inertia and indifference.”
In addition to his academic work, Damodaran is a highly sought-after speaker and consultant, having given presentations and lectures on valuation and corporate finance to a wide range of organizations and groups, including investment banks, private equity firms, and academic institutions.
He also observed that the stock market regulators in India have good intentions, but their focus is mostly on protecting retail investors from their own mistakes.
Damodaran gave out two reasons why Indian banks have always felt more comfortable lending to family businesses than stand-alone enterprises. “The first is that the bankers and family group members often are members of the social networks, making it difficult for the former to be objective lenders. The second is the perception, perhaps misplaced, that a family’s worries about reputation and societal standing will lead them to step in and pay off the loans of a family group business, even if that business is unable to,” he noted.
Damodaran is best known for his approach to valuation, which emphasizes the use of real-world data and practical examples. He has written several books on the topic, including “Investment Valuation: Tools and Techniques for Determining the Value of Any Asset” and “The Dark Side of Valuation: Valuing Old Tech, New Tech, and New Economy Companies.” These books have become standard references for professionals and students in the field of finance.
The Adani-Hindenburg fight
Damodaran’s observations come as the Adani group is facing one of its worst crises in recent years after US-based short-seller Hindenburg Research accused the group of fraud and stock manipulation.
The ports-to-power conglomerate has denied the accusations, saying the short-sellers allegation of stock manipulation has “no basis” and stems from an ignorance of Indian law.
Earlier today, industrialist and banker Uday Kotak said that he does not see systemic risk to the Indian financial system from recent events. He, however, said that large Indian corporates rely more on global sources for debt and equity finance.
“This creates challenges and vulnerabilities. Time to further strengthen Indian underwriting and capacity building,” Kotak, CEO of Kotak Mahindra, said.
