S&P revises outlook of Adani Electricity and Adani Ports from Negative to Stable

S&P revises Adani Group rating: Standard & Poor (S&P) has revised the outlook of Adani Electricity and Adani Ports from negative to stable, affirming their ratings. The decision comes as S&P acknowledges the conclusion of most regulatory investigations into the Adani Group without evidence of wrongdoing, reducing downside risks.

Governance risks still looming

While the stable outlook reflects strong business fundamentals and robust cash flows for Adani Electricity and Adani Ports in the next 12 to 24 months, S&P notes that the Adani Group remains exposed to some governance risks.

Supreme Court verdict on Adani-Hindenburg case

The Supreme Court delivered a crucial verdict on the ongoing probe into allegations by Hindenburg Research against the Adani Group. Hindenburg had accused the conglomerate of engaging in a stock manipulation and accounting fraud scheme, leading to a significant fall in Adani companies' share values.

The Supreme Court refused to transfer the SEBI probe into Hindenburg's allegations to another agency, emphasising the limited scope of judicial review in such cases. The court stated that it won't substitute its wisdom over SEBI's regulatory policies. A court-appointed expert committee, headed by Justice AM Sapre, gave a clean chit to SEBI, asserting that there was no regulatory failure. The committee also dismissed allegations of bias against its members.

OCCRP report dismissed

The court dismissed findings from the Organised Crime and Corruption Reporting Project (OCCRP) about alleged stock manipulation and accounting fraud by the Adani Group, stating such reports cannot be regarded as conclusive proof.

SEBI's probe extension

While SEBI completed 20 out of 22 investigations, it sought an extension for the remaining cases due to transaction complexity. The court ordered the completion of the two pending cases within three months. The Supreme Court directed SEBI and investigative agencies to probe whether Hindenburg's short selling caused any legal violations, instructing suitable action if necessary.

The court found no valid grounds to direct SEBI to revoke amendments to Foreign Portfolio Investments (FPI) and Listing of Obligations and Disclosure Requirements (LODR) regulations. The Union government and SEBI were directed to consider the expert committee's recommendations for strengthening regulatory mechanisms.