Adani Enterprises FPO opens today: Analysts, brokers cite growth potential, some flag valuation

Mumbai: Several brokers and analysts are recommending that investors subscribe to Adani Enterprises' ₹20,000 crore follow-on public offering (FPO) that opens Friday. The flagship entity of the Adani Group is selling shares in a price band of ₹3,112-3,276 apiece, with an option to "buy now, pay later" by way of subscribing to partly paid shares.

On Wednesday, the stock closed at ₹3,389.85 on the BSE, about 3.5% above the upper end of the FPO price band. The company is offering a discount of ₹64 per share to retail investors.

While those advising clients to bid in the FPO are bullish about the company's long-term prospects, analysts at several other brokerages said they do not track the company and refrained from making a recommendation. Some investment advisers, on condition of anonymity, said the current share valuation was elevated and so they were advising clients to skip the FPO.


The mega offering is a "golden opportunity to enter this Nifty50 stock", said Mumbai-based investment advisory and portfolio management services firm SP Tulsian. "The company's infrastructure play as well as new energy foray are all proxy to India's growth," Geetanjali Kedia, a senior research analyst and primary market expert at SP Tulsian, wrote in a note to clients. "Infrastructure will be the single most vital component in the country's growth for the next 25 years."

Of the ₹20,000 crore the company aims to raise through the FPO, it plans to utilise ₹4,165 crore to repay debt, while ₹10,869 crore will be for expansion, said the offer documents. Adani Enterprises had debt of ₹41,191 crore as on September 30, 2022. Kedia said the group's consolidated net debt-to-Ebitda ratio would slip below 4.0 after the FPO. On a standalone basis, its net debt to Ebitda is already quite comfortable at 1.1 times, the analyst said.

Individual investors' appetite for the FPO could depend on the share price performance of Adani Enterprises and the overall market sentiment over the next three days, said a senior broker who did not want to be identified.

While Adani Enterprises shares are down nearly 12% since the start of calendar 2023, they are up 102% in one year amid global uncertainties. In the last five years, the stock has risen 1,626%.

SBI Securities said at the upper end of the FPO price band of ₹3,276, Adani Enterprises was valued at price-to-earnings of 317 times. It did not give any recommendation on the FPO. The Nifty50 is trading at a PE ratio of 21.9.