Adani Enterprises FPO Price Band: Adani Enterprises (AEL) shares in Thursday’s intraday trade hit an over two-month low of Rs 3,463.50, down 4 per cent on the BSE after the company set a price band of Rs 3,112-Rs 3,276 per share for its Rs 20,000-crore follow-on public offering (FPO).
The floor price was set at a 13.4 per cent discount to the last close of Rs 3,595 on Wednesday, while the top-end is close to 9 per cent below. AEL is offering an additional discount of Rs 64 for retail investors.
The Adani Group’s flagship company has filed papers with capital market regulator Securities and Exchange Board of India (Sebi) on Monday for the FPO.
In the past one month, the stock price of AEL has declined 15 per cent ahead of its FPO. It has corrected 17 per cent from its record high level of Rs 4,189.55, touched on December 21, 2022. In comparison, the S&P BSE Sensex was down less than 1.6 per cent during the same period.
On November 25, 2022, the board of directors of AEL approved the raising of funds by way of a further public offering through a fresh issue of equity shares by the company.
The FPO will open for subscription on 27 January and close on 31 January.
The company will issue shares on a partly paid basis. The anchor investor bidding date for the FPO has been fixed on 25 January.
On Share Sale Proceeds
The Adani Group company will use the proceeds of the FPO for capital expenditure requirements and pay off some debt of its units. The company will use Rs 10,869 crore out of the Rs 20,000-crore to fund green hydrogen projects, airports facilities and greenfield expressways, the firm said in its latest prospectus.
The company will also use Rs 4,165 crore to repay the borrowings of three of its units, Adani Airport Holdings Ltd, Adani Road Transport Ltd, and Mundra Solar Ltd.
In November last year, Adani Enterprises’ Board of Directors had approved a decision to raise funds aggregating up to Rs 20,000 crore through FPO and plans to dilute 3.5 per cent stake through the FPO. Currently, the promoter group holds 72.63 per cent stake in the company.
Should you Invest?
“For retail investors perspective that 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 Ltd.
“FPO is generally value added in compare to invest in IPOs because investors get an idea about the company stock, result performances, business practices, growth projections and most important that investor very familiar with the stock and its price range," Sodani said.
Meanwhile, Ventura Securities value AEL on a SOTP basis for a price target of Rs 5,999 per share and recommend a BUY over the next 24 months, the brokerage firm said.
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