The Supreme Court ruling in the Adani-Hindenburg matter has made it clear that Sebi is the sole authority that will look into the allegations against the conglomerate 
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The Supreme Court ruling in the Adani-Hindenburg matter has made it clear that Sebi is the sole authority that will look into the allegations against the conglomerate A little under one year. That’s the time it took for the Adani-Hindenburg matter to reach its conclusion in the Supreme Court—from January 24, 2023, the day the US-based short-seller Hindenburg Research released a report accusing the Indian conglomerate of stock manipulation and financial fraud.
On January 3, 2024, a three-judge bench of the Supreme Court, headed by Chief Justice of India D.Y. Chandrachud, dismissed requests for creating a special investigation team (SIT) or transferring the probe into the allegations levelled by Hindenburg against the Adani Group to the Central Bureau of Investigation (CBI). It reposed faith in capital markets regulator Securities and Exchange Board of India (Sebi).
But this issue is far from over. Sebi is still conducting a probe related to certain allegations made by the US-based entity.
Without a doubt, the past year has been the most tumultuous in the history of the Adani Group, whose business interests span sectors like infrastructure, green energy, cement and FMCG.
The impact of the Hindenburg report was such that the conglomerate’s listed entities shed around $150 billion (`12.41 lakh crore) in market capitalisation just a month following its release.
To be sure, the group has consistently denied all allegations, terming the report a “malicious combination of selective misinformation and stale, baseless and discredited allegations that have been tested and rejected by India’s highest courts”. But that did little to assuage investor concerns, as was evident from the beating the stocks received.
After the verdict, Adani Group Chairman Gautam Adani posted on X (formerly Twitter): “The…Supreme Court’s judgement shows that: Truth has prevailed… I am grateful to those who stood by us. Our humble contribution to India’s growth story will continue…”
The Supreme Court order marks an important milestone as it brings the curtains down on what was one of the most keenly-followed cases by investors—not surprising as Adani Group stocks were among the biggest wealth creators in 2022.
“In an age where every news piece is taken at face value, the recent impartial scrutiny by regulators and the judiciary regarding third-party allegations is reassuring,” says Makarand Joshi, Founder of MMJC & Associates, a corporate compliance firm.
“The Supreme Court decision allowing Sebi to continue with investigation on the allegations…marks a significant step toward factual discernment. [It] sets a precedent, guiding retail investors to make informed decisions… It’s a powerful message against those exploiting rumours, signalling a new era of cautious investment decisions,” he adds.
The focus is now on Sebi. Incidentally, the regulator’s image was already boosted by the Supreme Court-appointed Expert Committee’s view that there was no failure on Sebi’s part.
The watchdog, as part of its submissions to the apex court, has stated that it conducted 24 investigations in the matter and 22 of those—alleged violations of rules on related-party transactions, insider trading, stock price manipulation, and FPI investments, among others—have already concluded. The Supreme Court has given Sebi three months to conclude the two pending probes.
Market participants, meanwhile, feel the biggest overhang on the group has lifted and the recent movement in stock prices corroborates this.
“Whatever was expected from the Supreme Court has come. Other than giving a good conduct certificate nothing else is pending,” says Arun Kejriwal, a market veteran and Founder of Kejriwal Research & Investment Services.
Some of the Adani Group stocks, including Adani Enterprises, Adani Green Energy, Adani Ports and Special Economic Zone, Adani Power, and Adani Total Gas have more than doubled when compared to their lows touched last year post the Hindenburg report.
But many group companies—Adani Total Gas, Adani Wilmar, Adani Energy Solutions, Adani Enterprises, and Adani Green Energy—are yet to touch the highs or levels seen before the Hindenburg report was released.
Stocks aside, investors will keep a close watch on Sebi as it concludes the two pending investigations and gets final clarity on a matter that has been in the news for the past one year and has impacted the overall Indian stock market as well.
The ball is now in Sebi’s court.
@ashishrukhaiyar
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