Its report claims that Adani's elder brother Vinod "manages a vast labyrinth of offshore shell entities" in tax havens including Mauritius, Cyprus and several Caribbean islands.

Hindenburg said it had identified numerous instances of undisclosed related-party transactions and earnings manipulation "to maintain the appearance of financial health and solvency" of listed Adani companies.

The allegations come ahead of an ambitious $2.5 billion follow-on public offer -- India's biggest-ever -- due to open for bids on Friday and aimed at bolstering the business empire's balance sheet.

"The report is a malicious combination of selective misinformation and stale, baseless and discredited allegations," Adani Group chief financial officer Jugeshinder Singh said in a statement.

Singh added that the report had been deliberately timed to undermine the conglomerate's reputation "with the principal objective of damaging the upcoming follow-on public offering".

'Afraid to speak out'

Adani Group is India's second-largest conglomerate, with the combined market capitalisation of its seven listed companies exceeding $218 billion.

Shares in Adani business units have soared up to 2,000 percent in the past three years, adding more than $100 billion to its founder's net worth and vaulting him up the ranks of the world's richest people.

Critics of the billionaire attribute his meteoric rise to a close association with Hindu nationalist Prime Minister Narendra Modi and support for his policies.

Hindenburg's report said there had been a pattern of "government leniency towards the group" stretching back decades.

"We believe the Adani Group has been able to operate a large, flagrant fraud in broad daylight in large part because investors, journalists, citizens and even politicians have been afraid to speak out for fear of reprisal," the report said.

Shares in flagship Adani Enterprises fell as much as three percent on Wednesday, before recovering to trade 1.41 percent lower in the afternoon.

Other business units fell as much as 6.5 percent over the day's trade.