The flagship company of ports-to-energy conglomerate Adani Group, Adani Enterprises, is set to raise ₹20,000 crore through a follow-on public offering (FPO) of new shares.
The FPO will open for subscription on January 27 and close on January 31.
As per media reports, it will be the largest FPO ever conducted in the country, breaking the previous record of ₹15,000 crore raised by YES Bank in July 2020.
The company will issue shares on a partly paid basis. The anchor investor bidding date for the FPO has been fixed on 25 January.
As per the company's BSE filing on January 18, the FPO committee of the board of directors of the company approved the floor price of the offer to be ₹3,112 per equity share and the cap price of the offer to be ₹3,276 per equity share for all categories of investors.
The FPO committee also approved the discount of ₹64 per FPO equity share for retail investors. The committee approved a minimum bid lot of four equity shares and in multiples thereafter.
Adani Enterprises stock has witnessed a stellar move in the last one year.
What should retail investors do?
The FPO may be a good opportunity for retail investors considering the stock's past performance and the company's future prospects as it is aggressively expanding.
"For retail investors, 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.
Sodani added that an FPO is generally value-added in comparison to IPOs because investors get an idea about the company's stock, result performances, business practices, and growth projections and investors are very familiar with the stock and its price range.
Naveen Mishra, Senior Research Analyst - Equity Research at CapitalVia Global Research, pointed out that listed companies can diversify their equity holdings by selling shares to the general public through an FPO.
"FPOs are typically viewed as preferable to IPOs since they give investors a better understanding of the management, operational procedures, and potential for growth of the company," said Mishra.
"Due to the stock's impressive performance in the past and the company's aggressive expansion into new markets, retail investors will have a good opportunity to purchase shares of the FPO at a reduced valuation. Long-term investors can consider this FPO although short-term investors should avoid this," he said.
Mishra is positive about the growth prospects of Adani Enterprises stock for the long term.
He highlighted that the operating revenue of the company increased by 189 percent to ₹38,175.23 crore from ₹13,218 crore in the same period last year. Its net profit for the quarter that ended in September 2022 more than doubled to ₹460.94 crore from ₹212 crore for the same time the previous year.
"Considering the consistence growth and recent expansion of the company, the stock is still attractive for the long term," said Mishra.
"The stock is valued at approximately 150 times its projected annual earnings. The FPO comes at a discounted valuation as compared to the current market price, which is attractive," Mishra added.
Disclaimer: The views and recommendations given in this article are those of individual analysts and broking firms. These do not represent the views of MintGenie.