Adani Enterprises FPO anchor book oversubscribed. Issue to open on Friday. Should you consider?

Adani Enterprises has finalised anchor book for its forthcoming Rs 20,000 crore follow-on public offer (FPO), as per a Bloomberg report. The report suggested the issue was subscribed 1.8-2 times and that International Holding Co PJSC, Abu Dhabi Investment Authority, Mubadala Investment Co PJSC and BNP Paribas were among bidders. As per the Bloomberg report IHC, which invested nearly $2 billion in Adani group companies last year, was looking to buy the largest chunk of around $200 million. Indian institutions including LIC and SBI Life also bade for the issue, the report suggested.

The Rs 20,000 crore FPO, which will be sold in Rs 3,112–3,276 price band, will open for subscription on January 27, Friday. It will conclude on January 31. The basis of allotment is likely by February 3, unblocking of funds is likely by February 4, credit of shares to demat account is likely by February 5 while the listing of the shares is likely by February 8. As per Adani Enterprises, the issue will be utilised for funding capital expenditure requirements of some of the subsidiaries in relation to certain projects of the green hydrogen ecosystem. It would also be used for improvement works of certain existing

airport facilities; and construction of greenfield expressway. Besides, the Adani group firm is looking to utilise the finds for repayment, in full or part, of certain borrowings and three of our subsidiaries, namely, Adani Airport Holding, Adani Road Transport, and Mundra Solar.

Assuming that the issue is subscribed, HDFC Institutional Equities noted that the stake of promoters in Adani Enterprises will fall to 68.94 per cent from 72.63 per cent at present. Public and employee holding in the company will increase to 31.06 per cent from 27.37 per cent at present.

Analyst take

“Adani Enterprises, with its established business relations with coal suppliers of Indonesia, Australia and South Africa, has evolved as India’s largest importer of thermal coal catering to the requirement of both private and public sector undertaking (PSU) clients. The Company has businesses in 4 core sectors – energy and utility, transportation and logistics, consumer, and primary industry. AEL represents an effective complement of established and developing businesses which address the needs of India,” said Asit C Mehta Investment Intermediates.

“The company is also going to manufacture end to end solution which in turn brings no fluctuations in margins. With its continuous focus on becoming leading manufacturer of green hydrogen and increasing number of operating mines, we believe AEL is well placed to capitalize on domestic and international opportunities. On the financial performance front, over FY19-22, it has reported a 20 per cent CAGR growth in the topline. Hence, we recommend subscribing the issue from a long-term prospective,” it said.

“From a retail investor perspective, it will be a good opportunity to buy Adani Enterprises stocks in the FPO at a discounted valuation since the company has done remarkably well in the past, entering into new businesses and expanding its business at a rapid pace. The same is shown in its results with September quarter profit more than doubling to Rs 460.94 crore while its revenues jumping 189 per cent YoY,” said  Girish Sodani, Head of Equity Market at Swastika Investmart.

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