MUMBAI: The concerns surrounding the debt position and the recent sharp fall in the share prices of Adani Enterprises Limited (AEL) may impact the subscription of the company’s Rs 20,000 crore Follow-on Public Offer (FPO). Hit by the report of US-based Hindenburg Research released on January 24, which raised concern about Adani Group’s mounting debt and alleged irregularities, the shares of AEL have fallen 15% in the afternoon trade at the Bombay Stock Exchange (BSE).
The shares were trading at Rs 2,878 apiece at 1.30 pm on Friday afternoon, much below the FPO price band of ₹3,112-3,276 per share. Company’s shares have plunged around 20% in the last six trading sessions as AEL shares had closed at Rs 3,595 apiece on January 18.
The demand for FPO is expected to be affected by this sharp fall in the shares. The concerns regarding Adani Group’s debt are likely to dent retail investors’ confidence in the FPO. However, the company has received strong demand from institutional investors despite these concerns. AEL has raised Rs5,985 crore from 33 institutional investors by allotting 1.83 crore shares under the anchor portion of its FPO.
Analysts say that retail investors with long-term investment views can invest in this FPO. "With its continuous focus on becoming a leading manufacturer of green hydrogen and increasing the 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 top line. Hence, we recommend subscribing to the issue from a long-term perspective," Asit C Mehta Investment Intermediates said.
The flagship entity of the Adani Group is selling shares in a price band of ₹3,112-3,276 apiece. Retail shareholders have a 35% reservation in the FPO and a discount of Rs 64 per share. Investors can bid for a lot of a minimum of 4 shares and in multiples of 4 thereafter.
“Adani group companies are in the infrastructure businesses with monopolistic characteristics. Some of their infrastructure assets like Ports already generating huge cashflows. Some other infrastructure assets are in the gestation period and would be generating positive cashflows in coming years,” said proxy firm InGovern in a note released today.