Adani Enterprises hits 2-mth low, down 4% on setting FPO price at discount

The company has set a price band of Rs 3,112-Rs 3,276 per share for its Rs 20,000-crore follow-on public offering (FPO), that opens for subscription on January 27.

Shares of Adani Enterprises (AEL) hit an over two-month low of Rs 3,463.50, down 4 per cent on the BSE in Thursday’s intra-day trade 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 stock of Adani Group flagship company was seen trading at its lowest level since November 1, 2022.

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.

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.

AEL on Wednesday, January 18, 2023, the company in a stock exchange announcement has said its FPO Committee will meet on January 25 to finalise anchor investor allotment and again on February 1 to finalise the offer price. The FPO is expected to open on January 27 and close on January 31. Through the FPO, AEL will issue partly paid-up shares.

AEL in Red Herring Prospectus said that the company proposes to utilise the net proceeds towards funding capital expenditure requirements of some its subsidiaries in relation to certain projects of the green hydrogen ecosystem; improvement works of certain existing airport facilities; and construction of Greenfield expressway.

The company will also utilise the proceeds for repayment, in full or part, of certain borrowings of Company and three of its Subsidiaries, namely, Adani Airport Holding Limited, Adani Road Transport Limited, and Mundra Solar Limited; and general corporate purpose. READ MORE

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.

The turbulence in the energy market (post the Russia-Ukraine war) and climate change issues have necessitated a rapid switch to alternative clean fuel sources. Green H2 has the most potential and Adani has made rapid progress to harness this opportunity.

Adani has put in place a green energy platform Adani New Energy Ltd (ANIL), which is end-to-end self sufficient providing fuel security and is expected to start production (0.29 MTPA) from early FY26 scaling to 3.0 MTPA by FY30 (79.1 per cent CAGR).
“We believe that ANIL’s platform design can be utilized to execute similar projects in other renewable rich geographies (of the Middle East, North Africa and Central America) while using the existing spare capacity for manufacture of solar panels and WTG,” the brokerage firm said.

Technical View
Bias: Negative
Target: Rs 3,020; Rs 2,930
Support: Rs 3,310
Resistance: Rs 3,680

After an astounding rally of 138 per cent from March 2022 to mid-December, shares of Adani Enterprises seem to have entered a corrective phase.

The stock is seen trading with a negative bias, both, on the daily and the weekly chart. As per the daily chart, the stock is currently placed fairly below the 20-DMA (Daily Moving Average), 50-DMA and 100-DMA placed at Rs 3,729, Rs 3,882 and Rs 3,672, respectively.

The stock seems on course to test the 200-DMA, indicating a downside target of Rs 3,020. In case of a 50 per cent retracement of the previous rally, the stock can dip to its next target of Rs 2,930.

Meanwhile, the bias is likely to remain negative as long as the stock trades blow Rs 3,680.

(With inputs from Rex Cano)