Adani Power surged 12.4%. Adani Total Gas, Adani Green Energy, Adani Enterprises, NDTV and Adani Energy Solutions jumped between 4% and 8% on Friday. The Sensex and Nifty shed nearly 0.5%, ending three days of advances. For the week, these indices notched up an 0.8% gain, extending the winning run to a third week.
The stock gains helped the Adani Group companies gain Rs 66,000 crore in market capitalisation over Thursday. The regulator’s finding has lifted the regulatory overhang.
“Sebi’s clean chit in the Hindenburg case has boosted investor confidence and will help the group’s stock valuations,” said Saurabh Jain, head of fundamental research at SMC Global Securities.
AgenciesNo Related-party Transactions
In two separate final orders on Thursday, the regulator said the allegations that promoters used some entities as conduits to route funds from various group companies to listed Adani Power and Adani Enterprises couldn’t be established.
Hindenburg had accused the group of engaging in “brazen stock manipulation” and “accounting fraud scheme,” sending the stocks crashing at the time.
To be sure, out of the 10 listed Adani companies, stocks of eight are still below their price on January 24, 2023, when the conglomerate’s total market capitalisation stood at Rs 19.24 lakh crore. Total market cap on Friday was Rs 14.37 lakh crore.
Sebi had initiated its investigation into these allegations for the period from FY13 to FY21, issuing show cause notices to the persons and companies named in the report on January 15, 2024. The regulator had said in the notices that Gautam Adani and his brother Rajesh Adani, being directors of Adani Ports & Special Economic Zone and Adani Power, approved financial transactions and allegedly engaged in acts of devising a scheme to conceal related-party transactions. They were also accused of false certification of the financials of these two companies for six years from FY13 to FY21.
However, in its final orders, Sebi said the transactions cannot be classified as fraudulent as there was no siphoning of money or diversion of funds. All the money had been returned with interest before the start of the investigation and these have not been held to be related-party transactions.
The Sebi order may have provided a strong sentiment push, but the long-term trajectory of Adani stocks will depend on execution of large-scale projects, said analysts.
“The development eases governance concerns that had weighed heavily on valuations, and the clean chit from Sebi removes the overhang of corporate governance-related practices and is sentimentally positive for Adani group,” said Sunny Agrawal, head of fundamental research at SBI Securities.
From a technical standpoint, analysts observed that the Sebi ruling acted as a strong breakout trigger across all major Adani stocks.
“Overall, Adani stocks had been consolidating in a range after witnessing a correction from higher levels partly due to regulatory concerns,” said Amruta Shinde, research analyst at Choice Broking. “However, the Sebi clearance has acted as a powerful positive catalyst, leading to sharp rallies across the group.”
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