After nearly crashing, Indian billionaire’s stock is back on the rise

The Adani Group, a conglomerate that builds and operates ports, power lines and food factories across India, started the year near the top of the world – its value has increased tenfold over the previous two years. Its founder and chief executive, Gautam Adani, was ranked last summer as the second richest man on the planet, just behind Elon Musk.

Then it crashed even faster than it had exploded. Hindenburg Research, a boutique investment firm, released a report Jan. 24 claiming the company had inflated its stock through financial gimmicks. This company had bet that Adani shares would fall, and they fell: by the end of February, the 10 publicly traded shares of the Adani Group had lost two-thirds of their value, a blow of almost 150 billion dollars. The report persuaded almost everyone to head for the exits.

The Adani group, however, hung on. This week he is riding his biggest rally since the fall. Its flagship stock, Adani Enterprises, gained 31% in four days. Another empire unit, Adani Ports, has fully recovered its losses. Optimistic voices say the whole group could grow another 15-20% this year.

Many factors have contributed to the Adani Group’s survival over the past four months. He had loyal investors among Indian public institutions, and bargain hunters came in and bought shares at rock bottom. The other reason: Adani had tangible assets, mostly infrastructure projects, that were there for everyone to see. These companies, whatever their value, had a value that many investors found attractive.

But the trigger for this week’s burst of optimism came indirectly from the Indian government.

On Friday, a panel convened by India’s Supreme Court after January’s explosive allegations said, in effect, that Indian financial regulators were doing their best in their oversight of the Adani Group, but had failed to penetrate the confusing ownership structures behind its funding. Moreover, they probably never will, having “drawn a blank”.

This is a frustrating situation for agencies involved in protecting Indian capital markets and could give many investors pause. But for investors sold on the Adani Group, it was a sweet relief. The court has asked the main regulator, known as the Securities and Exchange Board of India, to complete its activities by August 14, whether or not it manages to explain who owns the funds that enabled the shares to ‘Adani to increase tenfold since 2021. Otherwise, the report says, his work could go on endlessly, “a journey without a destination.”

Adani Group did not immediately respond to requests for comment. He called Hindenburg Research’s claims in January “baseless allegations based on imaginary patterns of fact” and even “a calculated attack on India”.

One of the investors who bought Adani heavily in March during the dip, Rajiv Jain of GQG Partners in Florida, bought even more as it surged this week, according to Bloomberg. Jain said his total stake in Adani’s companies was nearly $3.5 billion and he cited the value of Adani’s infrastructure business as the reason for his investment.

Beyond infrastructure, one of the Adani Group’s most valuable assets is something less tangible. Gautam Adani and Narendra Modi, India’s Prime Minister, have worked in tandem for decades. They rose through the ranks together in their home state of Gujarat, and Mr Modi flew to New Delhi in a private jet owned by Mr Adani after being elected head of the national government.

Since the shadow of doubt fell on his businesses, Mr. Adani has kept a relatively low profile in India. He kept busy abroad. He opened a new port in Haifa, Israel, where he posed with fellow Modi friend Binyamin Netanyahu. And he toured Europe and the United States to assure investors he was holding his ground. But Mr Modi, once ubiquitous at his side, refused to mention Mr Adani in public.

The findings of the Supreme Court panel suggest that the Adani group can now relax vis-à-vis the Indian authorities. Without the investigative powers they lack, regulators are unable to pursue the suspicions set in motion by Hindenburg Research in January. India’s political opposition, seizing on the link between Mr Adani and Mr Modi, has called for a special parliamentary panel that could uncover more. But between the court and Mr Modi’s parliamentary majority, they stand little chance.

The Adani Group’s position within India’s political economy appears strengthened, if not entirely repaired. This is an important development for more than stock market winners and losers. Mr. Modi’s vision for India depends on building a lot of infrastructure.

The country has already accelerated and improved a record number of projects during its nine years in power. Airports, highways, power transmission and more are all considerably better and more plentiful, more so than other indicators like private investment, which economists say lags behind. Much of the funding comes from the government. But construction also needs private partners.

Hindenburg Research, which is in New York, had argued that the Adani conglomerate was artificially raising its valuations to raise the funds it needed to cover its debts to foreign investors. Adani has taken steps to pay off her debt, but she could still attract the attention of foreign regulators.

But in India, Adani’s critics may have to change their plans. Opposition parties complain that they have been prevented from talking about Adani and Mr Modi in the press and even in parliament. Adani’s local competitors and partners must take heed that its central place in Indian affairs remains secure.


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