Further Public Offer (FPO) Size: Rs. 20,000 cr – India’s 2nd Largest FPO
- Entirely fresh issue, for Rs. 10,869 cr capex and Rs. 4,165 cr debt repayment
Price band: Rs. 3,112 to Rs. 3,276 per share
Retail Discount: Rs. 64 per share
Payment Schedule: 50% on application, 50% in one or more subsequent calls, over the next 12 months (retail to pay Rs. 1,606 per share on application)
M cap: Rs. 3.93 lakh cr at upper price band, implying 5% dilution
Issue Open: Fri 27th Jan to Tue 31st Jan 2023, Listing: Wed 8th Feb 2023
Grey Market Premium (GMP): We are strongly against ‘grey market premium’ as it is an unofficial figure, against SEBI guidelines.
A Proven Incubator
Adani Enterprises is a specialised incubator, having built, matured and successfully listed 6 group companies, with Adani Wilmar being last to list in 2022. It is now undertaking the FPO to grow 3 upcoming business (i) Roads (3 expressways in UP) (ii) Airports (Ahmedabad, Mangaluru, Lucknow) (iii) Energy (green hydrogen). Company’s infrastructure play (airport management, data center, defence and aerospace) as well as new energy foray (green hydrogen, solar manufacturing, end-to-end energy supply chain) are all proxy to India’s growth. As India @ 75, embarks on its centenary journey, infrastructure will be the single most vital component in country’s growth, for the next 25 years. Adani Enterprises will be a key catalyst, having a strong track record in some business like ports, energy transmission, foods etc.
Increase in Non-Promoter Float
Partly paid shares will get listed as a different security (ISIN not same as existing equity shares, similar to rights shares of RIL and Bharti Airtel). Post FPO, promoter stake will drop from 72.6% (30.9.22) to 68.9%, with retail float doubling from 2.7% to 5.3%. Institutional investors will hold 25.7% post FPO.
Company’s consolidated EBITDA has growtn at 40% CAGR in the last 3 years, with consolidated net debt at Rs. 35,910 cr, as of 30.9.22. Post FPO, consolidated net debt to EBITDA ratio will slip below 4x, while on a standalone basis, net debt to EBITDA ratio is already quite comfortable at 1.1x.
5% discount to yesterday’s closing share price is a very good discount, with an additional 2% for retail investors. FPO price can not be at a steep discount unlike rights issue, which is for the existing shareholders, while FPO is for all (new plus existing) shareholders.
Share price level of Rs. 3,276 was last seen in Sep 2022, while the 52 week high price of Rs. 4,190 was made on 21st Dec22.
This FPO must be used as a golden opportunity to enter this Nifty50 stock.