SEBI closes Adani Power probe; Morgan Stanley sees 30 per cent upside

The Securities and Exchange Board of India (SEBI) has closed its inquiry into Adani Power Limited and other Adani Group firms without penalty, concluding that allegations of irregular loan transactions were not established. The case originated from claims in the Hindenburg Research report published in January 2023.

SEBI issued two final orders on September 18, 2025, disposing of show-cause notices issued in January 2024 to Adani Ports and Special Economic Zone Limited, Adani Power Limited, Adani Enterprises Limited, and certain individuals. The notices alleged that loans routed through entities such as Adicorp Enterprises, Milestone Tradelinks, and Rehvar Infrastructure were intended to avoid related party transaction disclosures.

After reviewing submissions and conducting hearings, SEBI Whole Time Member Kamlesh C. Varshney ruled that the transactions did not qualify as related party transactions during the period under review, from FY 2012–13 to FY 2022–23. Amendments to the Listing Obligations and Disclosure Requirements (LODR) Regulations in 2021, which expanded the definition of related party transactions, applied only prospectively from April 2023.

The regulator found no evidence of fraud, diversion of funds, investor loss, or unfair trade practices, noting that all loans had been repaid with interest before the inquiry began. Proceedings against all entities and individuals, including Gautam Shantilal Adani and Rajesh Shantilal Adani, were therefore closed.

Following this regulatory clarity, Morgan Stanley has identified Adani Power as India’s largest private coal-based independent power producer, with 18,150 MW of operational capacity across 12 plants in eight states. The firm expects the company’s market share in coal-based generation to rise from 8 per cent to 15 per cent by FY32, backed by a 41.9 GW development pipeline.

Adani Power has acquired and revived 4,370 MW of stressed assets, with another 2,900 MW in integration. Its turnaround track record includes the Raipur, Mahan, and Raigarh plants, which have seen sharp improvements in EBITDA and full debt repayment. Recent acquisitions in FY25 are expected to support earnings growth from FY26 onwards.

Financial leverage has also declined, with net debt-to-EBITDA falling from 9.7x in FY19 to 1.8x in FY25. Morgan Stanley noted the resolution of most regulatory issues, including the Supreme Court dismissal of short-seller allegations and SEBI’s recent clearance. It initiated coverage of Adani Power with an “Overweight” rating and a target price of Rs 818, projecting capacity to grow 2.5 times and EBITDA to triple by FY33.