Adani Enterprises FPO open, should you subscribe?

Adani Group

Adani Enterprises is set to open its follow-on public offer for subscription on January 27 with the closing date scheduled on January 31. The price band for the offer is Rs 3,112-3,276 per share. Retail shareholders have a 35 percent 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 is planning to raise Rs 20,000 crore via the largest ever FPO in the Indian capital markets history.

The funds will be utilised for projects of the green hydrogen ecosystem, improvement of certain existing airport facilities and construction of greenfield expressway.

On January 25, the company 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.

"From retail investors perspective, it will be a good opportunity to buy stocks in the FPO at a discounted valuation since the stock has done remarkably well in past, entering into new businesses and expanding its business at a rapid pace," said Girish Sodani, head of equity market at Swastika Investmart.

"The same is reflecting in results also the company's Q2 net profit more than doubled to Rs 460.94 cr compared with Rs 212 cr and its revenue from operations jumped 189 percent compared to last year," he added.

Asit C. Mehta Financial Services Limited also has a 'subscribe' rating on the issue. "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 percent compounded annual growth rate in the topline," it said in a report.

Ashika Research pointed out that the company's average return on equity (RoE) stood at ~5 percent over FY18-21. "Thus, we recommend our investors to Subscribe to the FPO as it is a nation building group and it is foraying into sunrise sector that is green hydrogen which has immense growth opportunity," it said.

In other news, Adani Group's chief financial officer Jugeshinder Singh has said in a statement that the Hindenburg Research's report on the group's 'debt levels and sky-high valuations' was 'malicious combination of selective misinformation and stale, baseless and discredited allegations'.

"The timing of the report’s publication clearly betrays a brazen, mala fide intention to undermine the Adani Group’s reputation with the principal objective of damaging the upcoming follow-on Public Offering from Adani Enterprises," he said.

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