- 20,000 crore mega issue
Mumbai: Adani Group, with a market capitalization of more than Rs 19 trillion, surprised everyone by announcing the mega public issue of its top company Adani Enterprises Ltd. (AEL) despite the ongoing fall in the stock market. Is. Adani Enterprises came out with its first issue in 1994 at Rs 150 per share and now after 28 years is coming up with a Rs 20,000 crore follow-on public offering (FPO) which will open on January 27, a day before the presentation of the Union Budget. Will close on 31 January 2023. This is the 11th IPO in the history of the Indian capital market. This is the second major public issue after LIC’s Rs 21,000 crore IPO last year. Despite being the most valuable Indian government company, LIC’s IPO disappointed investors and resulted in a loss of 8% on the day of listing.
Similar was the case with the mega issues of Yes Bank, SBI Card, GIC and Coal India. The worst happened to Reliance Power and Paytm. Investors have been disappointed in most of the mega issues that have come so far. That’s why there is a discussion among investors whether Adani Enterprises will benefit from the general issue or not?
Largest Wealth Creator Group
Going by the track record of the group led by billionaire industrialist Gautam Adani, it has emerged as the biggest wealth creator over the years. Group companies may not be earning much profit, but their shares are running at the fastest pace and making investors rich. In the last three years, the group’s 5 companies Adani Power, Adani Green, Adani Transmission, Adani Enterprises and Adani Total Gas have increased from 6 times to Has given returns up to 36 times thatched roof. Adani Port, the sixth company, has given 3 times profit. Adani Wilmar, the 7th company of the group, has given a tremendous return of about 3 times in a year after bringing the IPO. After taking over the major cement companies Ambuja and ACC in the past, they have also given good returns. The group has also been accused of receiving special ‘favours’ from the government, but regardless of these things, the group is becoming an investor’s favorite by providing strong returns.
Trying to attract retail investors
With a market capitalization of Rs 4 trillion, Adani Enterprises currently has an equity capital of Rs 114 crore, of which promoters hold 73%. Even after this general issue, the equity capital of the company will increase by only 5% and the equity will increase to Rs 120 crore only. In the FPO, the company’s Re 1 face value shares have been kept in the price range of Rs 3112 to Rs 3276, which is only 5% less than the closing price of Rs 3434 on BSE on Monday. Its stock had gone up to Rs 4189 in high. The group wants to add more number of retail investors through this FPO. Who currently have only 2 percent shares. That’s why the group has kept the lot size of only 4 shares for the application and is giving a discount of Rs 64 per share to the retail investor. The application amount in FPO is also being taken at 50% i.e. Rs 1638 per share only. The rest will be taken later. The application amount for 4 shares will be Rs.6296 only. 6.15 crore equity shares will be offered in this FPO.
Green hydrogen business will become a gamechanger!
Adani Enterprises, established in March 1993, is India’s largest listed business incubator and operates in 4 key industry sectors Energy & Utility, Transportation & Logistics, Consumer and Primary Industry. This company has helped in setting up new businesses for the Adani Group over the years. Developed them into 6 large and self-sustaining business segments and later listed them independently on the stock exchanges, adding value to millions of their shareholders. Adani Enterprises’ current portfolio includes a green hydrogen ecosystem, data centers, airports, road construction, food FMCG, digital, mining, defense and industrial manufacturing. The company is capitalizing on new opportunities that could be game changers in the green hydrogen, airport and data center businesses. In the near future, AEL may de-merge some of its subsidiaries or bring an IPO. AEL has a reserve of Rs 31,000 crore and a debt of Rs 29,500 crore. In the first half of the financial year 2022-23, the company has earned a net profit of Rs 901 crore on a turnover of Rs 79,000 crore. On which EPS was Rs 8.23 and book value was Rs 317 per share. The company is trading at a PE ratio of 231 at the upper FPO price of Rs 3,276 per share.
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Different than other major issues
At first glance, the offer price in this mega FPO of Adani does not look particularly attractive. At the current share price post FPO, there seems to be a strong scope for hitches. Experts believe that there is tremendous growth potential in its green hydrogen and data center business. Which can have a positive impact on the company’s profit and share price. This mega issue of Adani looks very different in comparison to the mega issues of other companies that have come so far. Given the future growth strategy of Adani Enterprises and the track record of the group, the company’s FPO offers glimpses of future profit opportunities.
Adani FPO: At a Glance
- Price Range : Rs 3,112 to Rs 3,276 per share
- Retail Investor Exemption : Rs 64 per share
- Lot Size : 4 shares
- Amount payable on application : 50 percent
- balance payment : after allotment of shares
- FPO Opening Date : 27 January
- FPO closing date: 31 January
- Share Allotment Date : February 7
- Share sale in the offer: 6.15 crore shares