The Adani Group, a conglomerate that builds and operates ports, power lines and food factories across India, began the year nearly on top of the world — having increased in value tenfold over the previous two years. Its founder and chief executive, Gautam Adani, was ranked the second-richest man on Earth last summer, just behind Elon Musk.
Then it crashed even more quickly than it had shot up. Hindenburg Research, a boutique investment firm, issued a report on Jan. 24 claiming the company had inflated its stock through financial gimmickry. That firm had bet that Adani’s shares would tank, and down they went: By the end of February, the Adani Group’s 10 publicly traded stocks had lost two-thirds of their value, a hit of nearly $150 billion. The report persuaded nearly everyone to head for the exits.
The Adani Group hung on, however. This week it is riding its biggest rally since the downfall. Its flagship stock, Adani Enterprises, gained 31 percent in four days. Another unit of the empire, Adani Ports, has recouped its losses completely. Bullish voices say the whole group might rise by another 15 to 20 percent this year.
There were many factors behind the Adani Group’s survival over the past four months. It had loyal investors among Indian state-run institutions, and bargain hunters came in and bought stock on the low. The other reason: Adani had tangible assets, mostly infrastructure projects, that were there for everyone to see. These businesses, whatever they were worth, had value that many investors found appealing.
But the trigger to this week’s burst of optimism came indirectly from the Indian government.
On Friday, a committee assembled by India’s Supreme Court after the bombshell allegations in January said, in effect, that India’s financial regulators were doing the best they could in their oversight of the Adani Group, but had failed to penetrate the confusing ownership structures behind its funding. What’s more, they probably never will, having “drawn a blank.”
That is a frustrating situation for the agencies involved in protecting India’s capital markets and might give pause to many investors. But for investors sold on the Adani Group it came as sweet relief. The court asked the main regulator, known as the Securities and Exchange Board of India, to finish its business by Aug. 14, whether or not it manages to explain who owns the funds that helped Adani’s shares grow tenfold since 2021. Otherwise, the report said, its work might go on endlessly, “a journey without destination.”
The Adani Group did not immediately respond to requests for comment. It has called claims made by Hindenburg Research in January “baseless allegations based on imaginary fact patterns” and even “a calculated attack on India.”
One of the investors who bought into Adani heavily in March during the trough, Rajiv Jain of GQG Partners in Florida, bought even more as it surged this week, according to Bloomberg. Mr. Jain said his total stake in Adani companies was near $3.5 billion, and he cited the value of Adani’s infrastructure businesses as a 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 been working in tandem for decades. They came up through the ranks together in their home state of Gujarat, and Mr. Modi flew to New Delhi on a private jet belonging to Mr. Adani after he was elected to lead the national government.
Ever since the shadow of doubt fell upon his companies, Mr. Adani has kept a relatively low profile within India. He stayed busy abroad. He opened a new port in Haifa, Israel, where he posed with Mr. Modi’s friendly counterpart, Binyamin Netanyahu. And he did tours of Europe and the United States to assure investors that he was standing strong. But Mr. Modi, once ubiquitous by his side, has refused to mention Mr. Adani in public.
The findings from the Supreme Court’s committee suggest that the Adani Group can now relax as far as the Indian authorities are concerned. Without investigative powers that they lack, the regulators are incapable of pursuing the suspicions set in motion by Hindenburg Research in January. India’s political opposition, seizing on the connection between Mr. Adani and Mr. Modi, has been calling for a special parliamentary panel that might unearth 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 looks strengthened, if not fully repaired. That is an important development for more than just the stock market’s winners and losers. Mr. Modi’s vision for India depends on building a great deal of infrastructure.
The country has already sped up and improved a record number of projects during his nine years in power. Airports, highways, power transmission and more are all drastically better and more plentiful, more so than other indicators like private investment, which economists say is lagging. Much of the funding comes from the government. But building needs private partners, too.
Hindenburg Research, which is in New York, had argued that the Adani conglomerate was artificially pumping up its valuations to raise money that it needed to cover its debts to investors abroad. Adani has taken action to pay down its debt load, but it still could attract scrutiny from foreign regulators.
But within India, Adani’s critics may need to alter 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 alike must reckon with the fact that its central place in Indian business remains secure.