Adani Ports (NSE: ADANIPORTS) led the varied Adani Group stocks upwards today on the release of a Supreme Court decision about the Hindenberg allegations. Whether the decision is quite the clearance some are taking it to be is another matter though. The specific phrasing isspecific phrasing is: “...it is not possible to conclude that there was a regulatory failure on the price manipulation allegation.” Which isn't, not really, quite and wholly the same as stating that there's no price manipulation as alleged.
Adani Ports, along with other Adani Group listed vehicles, have suffered substantial declines in their share prices as a result of allegations from the short selling from Hindenberg. Adani Ports quite badly in fact as that's the acknowledged cash cow of the group. For Hindenberg is suggesting that there's a web of offshore companies and arrangements by which varied group companies borrow money to then purchase the shares of other group companies. This raises the share prices of all group companies, makes it easier to raise capital and so on. But of course the risk is that if any one company sees a significant share price fall then the security for the loans would be triggered, the loans must be repaid. Which then causes the fall of the share price of that group company, thereby triggering the next loan default and so on.
Now, whether Hindenberg's allegations are true is a matter still to be decided upon. But even the hint has dropped those Adani share prices. So, when news comes through of a possible refutation they rise again.
Adani Ports share price from NSEThis then though leaves us with a slight problem For, yes and most certainly, some will be taking this as a refutation of the whole and original allegations. Which, looking at that language used, isn't quite so. “Also, the panel's report stated that it was difficult to arrive at a finding of a regulatory failure of the legislative side. But acknowledged that there is a need for effective enforcement policy. Hence, SC advises that the enforcement policy must be in consistent with the legislative policy adopted by Sebi.” Yes, we are aware that Indian bureaucratic English differs from other variants of that same language. But that's not in fact a full throated denial that there was any manipulation. It reads to us rather more like an inability to find anyone to blame about how it was all looked at.
As we say we've no particular view on the allegations themselves. We're just here pointing out that this doesn't prove they're wrong.