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Adani Enterprises FPO review (Apply)

Review By Dilip Davda on January 20, 2023

•    AEL is a flagship company of the Adani Group that has diverse activities. 
•    It suffered a minor setback for FY21 on account of the Pandemic.
•    FY23-H1 numbers are indicative of its future stance.
•    This issue is designed on a partly paid share regime as an investor-friendly gesture.
•    This FPO is meant for investors looking for long-term wealth creation options. 

AEL is coming out with its FPO (Follow-on Public Offer) after a gap of 28 years as its maiden IPO came in 1994. The announcement of FPO plans from this market's fancy counter became the talk of the town. As an investor-friendly gesture, it has opted for staggered payment options for the right issue as 50%, 25%, and 25%. As a flagship company of the Adani group, this company has rewarded its long-term stakeholders handsomely with preferential allotments in the other group companies that got listed during the last two decades plus. As per management, they will continue the trend of rewarding stakeholders at an appropriate opportune time. 

Adani Enterprises Ltd. (AEL) is a part of the Adani group, which is among India's top business houses with an integrated energy and infrastructure platform in India and a long track record of successfully executing large-scale projects. AEL is one of India's largest listed business incubators in terms of market capitalization and is driven by the philosophy of incubating businesses in four core industry sectors - energy and utility, transportation and logistics, consumer, and primary industry. 

It represents an effective complement of established and developing businesses that address the needs of India. It has, over the years, seeded new business interests for the Adani group, developed them into sizeable and self-sustaining business verticals, and subsequently demerged them into independently listed and scalable platforms, thereby unlocking value for its shareholders. The company has a demonstrated track record of creating sustainable infrastructure businesses since 1993. 

AEL has emerged as an incubator by investing, maturing, and eventually demerging various diversified businesses. Since inception, it has incubated six decacorn businesses and successfully listed them, including by way of demergers, as Adani Ports and Special Economic Zone Limited, Adani Power Limited, Adani Transmission Limited, Adani Green Energy Limited, Adani Total Gas Limited, and Adani Wilmar Limited. As of December 31, 2022, the Adani group had a market capitalization of Rs.18402 billion (approximately US$222 billion), and are one of the largest listed group by market capitalization in India. As of September 30, 2022, it had 1454 employees on its payroll. 

Adani Enterprise Ltd. (AEL) is planning to mobilize Rs. 20000 cr. from its FPO and has announced a price band of Rs. 3112 - Rs. 3276 per share of Re. 1 each. At the upper cap, the company is likely to issue approx. 61050060 fresh equity shares at the upper price band. This issue is being floated with investors friendly measures that include part payments in stages as and when called for by the company. The minimum application to be made is for 4 shares and in multiples thereon, thereafter. Only 50% amount is to be paid along with the application and the rest on one or more calls from time to time. After reserving the shares worth Rs. 50 cr. for its eligible employees, AEL has allocated 50% for QIBs, 15% for HNIs, and 35% for Retail investors. It is offering a discount of Rs. 64 per share to Retail investors. Thus the offer is being made at a discount of about 5.22% to 7.07% based on its last traded price of Rs. 3456.4 per share (as of January 20, 2023 - BSE Code 512599). The issue opens for subscription on January 27, 2023, and will close on January 31, 2023. Post allotment, shares will be listed on BSE and NSE as partly paid shares. The issue constitutes 5.08% of the post-FPO paid-up capital of the company. 

From the net proceeds of the FPO funds, it will spend Rs. 10869.00 cr. for the capital expenditure of its subsidiaries in relation to projects of green hydrogen ecosystems, improving the infrastructure of certain existing airport facilities and construction of greenfield expressway, Rs. 4165.00 cr. for repayment of certain borrowing by the subsidiaries in part or full, and the rest for general corporate purposes. 

The joint Book Running Lead Managers (BRLMs) to this FPO are ICICI Securities Ltd., Jefferies India Pvt. Ltd., SBI Capital Markets Ltd., Axis Capital Ltd., BoB Capital Markets Ltd., IDBI Capital Markets and Securities Ltd., JM Financial Ltd., IIFL Securities Ltd., Monarch Networth Capital Ltd., and Elara Capital (India) Pvt. Ltd. Link Intime India Pvt. Ltd. is the registrar of the issue. 

Post-FPO, AEL's current paid-up equity capital of Rs. 114.00 cr. will stand enhanced to Rs. 120.11 cr. Based on the upper cap of the FPO pricing, the company is looking for a market cap of Rs. 393464.37 cr. As of January 13, 2023, the total number of Shareholders of the Company was 267,918.

On the financial performance front, for the last three fiscals, AEL has (on a consolidated basis) posted a turnover/net profit of Rs. 44086.21 cr. / Rs. 798.00 cr. (FY20), Rs. 40290.93 cr. / Rs. 746..32 cr. (FY21), and Rs. 70432.69 cr. / Rs. 475.37 cr. (FY22). For H1 of FY23, it earned a net profit of Rs. 849.63 cr. on a turnover of Rs. 79507.89 cr. While it suffered a setback for FY21 on account of the pandemic in line with the general trends, it has posted super results for the H1 of FY23 indicating its future stances. 

For the last three fiscals, AEL has posted an average EPS of Rs. 8.05 and an average RoNW of 4.26%. The issue is priced at a P/BV of 10.32 based on its NAV of Rs. 317.34 as of September 30, 2022, and at a P/BV of 7.00 based on its post-FPO NAV of Rs. 467.73 per share. Its net debts to EBITDA (on an annualized basis) were 3.61 (H1 FY23), 5.20 (FY22), 3.01 (FY21), and 2.18 (FY20). 

If we annualize FY23 earnings and attribute it to post-FPO fully diluted paid-up equity capital, then the asking price is at a P/E of around 231.52. Thus the FPO appears fully priced. 

AEL has been a dividend-paying company. It paid a dividend of 100% for the last three fiscals. It will continue to have a prudent dividend policy based on its financial performance and future prospects. 

The company has no listed peers to compare with. 

The 10 BRLMs associated with the offer have handled 97 public issues in the past three years, out of which 34 issues closed below the offer price on the listing date.

Conclusion / Investment Strategy

The Adani group has become the darling of investors over the years and is giving a tough fight to the Ambani group in the number race. AEL has rewarded its stakeholders handsomely and is confident of continuing the trend. Based on its current financials, the issue appears fully priced. This FPO is meant for investors looking for long-term wealth creation options.

Reviewer recommends Subscribing to the issue.

Review By Dilip Davda on January 20, 2023

Review Author

DISCLAIMER: No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. Readers must consult a qualified financial advisor before making any actual investment decisions, based on the information published here. My reviews do not cover GMP market and operators game plans. Any reader taking decisions based on any information published here does so entirely at their own risk. Investors should bear in mind that any investment in stock markets is subject to unpredictable market-related risks. The above information is based on RHP and other documents available as of date coupled with market perception. The author has no plans to invest in this offer.

About Dilip Davda

Dilip Davda, a freelance journalist

Dilip Davda is veteran journalist associated with stock market since 1978. He is contributing to print and electronic media on stock markets/insurance/finance since 1985.

Dilip Davda is a leading reviewer of public issues and NCDs in the primary stock market in India. The knowledge he gained over 3 decades while working in the stock market and a strong relationship with popular lead managers makes his reviews unique. His detail fundamental and financial analysis of companies coming up with IPO helps investors in the primary stock market. Dilip Davda has a special interest in analyzing the SME companies and writing reviews about their public issues. His reviews are regularly published online and in news papers.

(Dilip Davda -SEBI registered Research Analyst-Mumbai,

Registration no. INH000003127 (Perpetual)

Email id: ).

Adani Enterprises FPO FAQs

  1. 1. Why Adani Enterprises FPO?

    The initial public offer (IPO) of Adani Enterprises Limited offers an early investment opportunity in Adani Enterprises Limited. A stock market investor can buy Adani Enterprises FPO shares by applying in IPO before Adani Enterprises Limited shares get listed at the stock exchanges. An investor could invest in Adani Enterprises FPO for short term listing gain or a long term.

  2. 3. Adani Enterprises FPO what should investors do?

    Adani Enterprises FPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the Adani Enterprises FPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts in the above answer.

  3. 4. Is Adani Enterprises FPO good?

    Our recommendation for Adani Enterprises FPO is to subscribe.

  4. 5. Is Adani Enterprises FPO worth Investing?

    As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to subscribe to the Adani Enterprises FPO.

  5. 6. When will Adani Enterprises FPO allotment status?

    The Adani Enterprises FPO allotment status will be available on or around February 3, 2023. The allotted shares will be credited in demat account by February 7, 2023. Visit Adani Enterprises FPO allotment status to check.

  6. 7. When will Adani Enterprises FPO list?

    The Adani Enterprises FPO list date is not yet available. The Adani Enterprises FPO is planned to list on February 8, 2023, at BSE, NSE.


4. Vijay     Link|February 20, 2023 3:00:48 PM
Dilip ji, this wasn't an honest review
3. Anoop     Link|February 3, 2023 12:02:42 AM
Easy for people to criticise a review in hindsight. In my opinion, Adani Enterprises is fairly valued at CMP and I will accumulate for long term. It's not just a stock, it's like an incubator ETF.
2. Kumar     Link|January 30, 2023 11:59:32 AM
Shocking that you too fell for this Hype, always used to look out for your reviews! Not anymore!
1. Sachin     Link|January 27, 2023 5:36:51 PM
Dilipji, I have been a great fan of your reviews and recommend them to all. But this review of Adani from you is shocking. Cannot trust you anymore.