Adani Group stocks rise as SEBI’s dismissal signals end to Hindenburg overhang

Audio By Carbonatix

Enlarge

By Kashish Tandon

(Reuters) – Adani Group stocks closed higher on Friday, a day after India’s markets regulator dismissed parts of short-seller Hindenburg Research’s stock manipulation allegations against billionaire Gautam Adani and his conglomerate, signalling a potential end to the group’s regulatory troubles.

The Securities and Exchange Board of India is still examining more than a dozen allegations that Adani Group and certain offshore funds broke securities rules, Reuters reported, citing sources.

“There are at least over a dozen cases still pending for final orders,” the source said, referring to decisions on whether to dismiss allegations or impose monetary penalties.

All nine entities under the Adani Group ended higher with gains ranging from 0.3% to 12.4%, led by Adani Power.

Adani Power was also boosted by Morgan Stanley starting coverage on the power producer with an “overweight” rating.

Flagship Adani Enterprises rose 5%.

Adani Total Gas jumped 7.3%, while Adani Energy Solutions and Adani Green gained 4.7% and 5.3%, respectively.

In its order, SEBI said transactions between Adani Group companies and companies flagged by Hindenburg could not be considered related-party transactions and therefore did not violate regulatory disclosure norms or constitute market manipulation.

The SEBI launched its probe in 2023 after U.S.-based Hindenburg accused Adani Group of using tax havens and concealing related-party transactions.

“This (SEBI order) signals an end to the allegations that have tainted the company’s image and stock price,” said Deven Choksey, managing director at DRChoksey FinServ.

The charges, which the conglomerate denied, erased about $150 billion in market value at the time, though some stocks have since rebounded.

“Investors had quickly reacted to the Hindenburg Report without dipping into the data of the company’s financials,” Choksey said.

Three of the group entities – Adani Power, Adani Ports and Ambuja Cement – have recovered losses triggered by Hindenburg report and are up 17%, 89% and 145% since then.

Adani Enterprises, which had plunged about 70% to a two-year low within just seven days after the report, briefly erased the losses in June last year, but currently remains 28% below pre-Hindenburg levels.

Other group stocks are down between 20% and 80% since the Hindenburg report.

(Reporting by Kashish Tandon and Anuran Sadhu in Bengaluru; Editing by Harikrishnan Nair, Nivedita Bhattacharjee and Tasim Zahid)