The case against the Adani Group and American short-seller Hindenburg Research has taken a significant turn, with the Supreme Court (SC) of India delivering its verdict. The SC bench comprising Chief Justice DY Chandrachud, Justice JB Pardiwala, and Justice Manoj Misra gave the Adani Group a ‘clean chit’ on allegations of stock manipulation and accounting fraud. The verdict upheld the Securities and Exchange Board of India’s (SEBI) findings.
Impact on the Group and the Market
When Hindenburg released its report In January 2023, accusing the Adani Group of overleveraging, accounting irregularities, and stock manipulation, a massive sell-off decreased $140 billion for the Adani Group as ₹20,000 crore share was canceled. Within days, the group’s flagship company, Adani Enterprises, lost over 50% of its value, wiping out $60 billion from its founder Gautam Adani’s wealth.
The SC’s verdict relieved the Adani Group and sent its share prices soaring.
- 9.1% increase in Adani Enterprises’s stock before the verdict was out, the highest in 11+ months.
- 20% and above jump in one day after the verdict for Adani Enterprises
- 12% increase in Adani Group stocks
- ₹15+ lakh crore overall market capitalization
- 10 listed Adani Group firms’ shares traded higher in Mumbai
Key Points of the Judgment
- Independent investigations by SEBI: The court upheld SEBI’s findings that cleared the company in 22 out of 24 cases and directed SEBI to complete investigations in the remaining two within three months.
- Caution Against Petty Petition: The SC said news reports or independent studies, such as the Organized Crime and Corruption Reporting Project (OCCRP) reports, cannot alone lead to a SEBI investigation as they cannot be verified. The court cautioned against filing petitions without adequate justification or thorough research.
- No Conflict of Interest: The court dismissed allegations of potential conflict of interest against members of the court-appointed panel.
- SEBI’s Authority Upheld: The judgment reinforces SEBI’s vital role in safeguarding the integrity of India’s capital markets.
- Investigating Short Sellers: Both the Government and SEBI have been directed to investigate any potential legal violations by the short seller involved in the case and take appropriate action if necessary.
- No valid grounds to direct SEBI to revoke its amendments on Foreign Portfolio Investment (FPI) and Listing Obligations and Disclosure Requirements (LODR) regulations
Share Prices After the Verdict:
The SC’s verdict is favorable for the Adani Group, which is also reflected in the share prices.
|Share Price (₹)
|Adani Energy Solutions
|Adani Total Gas
|Adani Green Energy
Beyond the Numbers
The Supreme Court’s verdict is not just about numbers on a stock market but also marks a shift in the narrative around the Adani Group. The initial shockwaves of the Hindenburg report had created a climate of doubt and uncertainty, casting a shadow over the company’s future prospects.
The verdict, however, has helped to restore some of the lost trust and confidence, which could have significant implications for the Adani Group’s future regarding new investors, expansion plans, and the company’s overall image.
I’m Archana R. Chettiar, an experienced content creator with
an affinity for writing on personal finance and other financial content. I
love to write on equity investing, retirement, managing money, and more.