Adani Enterprises FPO opens even as Hindenburg allegations shoot down share price; should you subscribe-

Adani Enterprises FPO opens even as Hindenburg allegations shoot down share price; should you subscribe?

Adani Enterprises FPO (follow-on public offer) opened today for retail subscription, even as the company shares tanked over 3% to Rs 3,180 in the aftermath of the Hindenburg report. Adani Enterprises’ much-awaited follow-on public issue, with a price band of Rs 3,112-3,276 per share, will close on 31 January. Retail shareholders have a 35% reservation in the FPO and a discount of Rs 64 per share. Investors can bid for a lot of minimum 4 shares and in multiples of 4 thereafter. The Adani Group company plans to raise Rs 20,000 crore through the FPO, largest ever in the Indian capital markets history.Adani Enterprises raises Rs 6000 cr from anchor investors ahead of FPO

On Wednesday, Adani Enterprises said it has raised close to Rs 6,000 crore from anchor investors. A total of 33 investors participated in the anchor book including Maybank Securities, Abu Dhabi Investment Authority, Societe Generale, Goldman Sachs, Morgan Stanley Asia (Singapore), Nomura Singapore and Citigroup Global Markets Mauritius. Analysts at Ventura Securities value Adani Enterprises shares on a SOTP basis for a price target of Rs 5,999 per share and recommend a ‘Buy’ at the CMP of Rs 3,640, for a potential upside of 64.8% over the next 24 months.

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“Adani Enterprises will continue to develop all the business segments and will create long-term wealth for its investors. On financial performance front, over FY18-21, it has reported a 26.5% CAGR growth in topline. EBITDA margin during the period has maintained at ~5%. Average RoE stood at ~5.0%, over FY18-21. Thus, we recommend our investors to Subscribe to the Adani Enterprise FPO as it is a nation-building group and it is foraying into the sunrise sector that is green hydrogen which has immense growth opportunity.”

Asit C. Mehta Investment Interrmediates: Subscribe for long-term

“Adani Enterprises (AEL), 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. AEL represents an effective complement of established and developing businesses that address the needs of India. The Company is also going to manufacture end-to-end solutions which in turn brings no fluctuations in margins. With its continuous focus on becoming a 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% CAGR growth in the topline. Hence, we recommend subscribing to the issue from a long-term perspective.”

Sushil Finance Consultants: Neutral

Adani Enterprise has a diversified business, including gas and oil exploration, coal and iron ore mining, and edible oil and agro products. Though its profit margin is declining from 2.6% to 1.1% from FY20 to FY22. The issue is priced at a P/BV of 10.32 based on its NAV of Rs. 317.34 as of September 30, 2022. “The stock has surged around 100% in the last one year horizon. Valuation does not seem attractive at this point of time. Issue Price is at just 7% to 10% discount of CMP. We have Neutral view on the issue.”

The funds raised from the FPO will be used to fund capital expenditure requirements of some Adani Enterprises’ subsidiaries in relation to certain projects of the green hydrogen ecosystem; improvement works of certain existing airport facilities; and construction of greenfield expressway. A portion of the proceeds will be utilised for repayment, in full or part, of certain borrowings of the company and three of its subsidiaries, namely, Adani Airport Holding, Adani Road Transport, and Mundra Solar. The company also plans to use a portion of the proceeds for general corporate purposes.

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