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Adani’s Firm Plans To Raise 1.8 Bn USD In New Shares

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The issuance for a stock witnessed outsized gains, will test investor appetite, compounded by lower liquidity relative to peers and sparse analyst coverage. Presently, that valuation of Adani Enterprises at which it is being traded is 164 times of its one-year forward earnings

Asia’s richest person Gautam Adani’s flagship firm Adani Enterprises is planning to issue nearly 1.8 billion dollar in new shares, as reported by a media house.

The multi-billionaire business tycoon Gautam Adani’s conglomerate is working with advisers on the follow-on issue and may sell the shares soon in the coming year. The sale may reach nearly 2.4 billion dollar, the report added.

The issuance for a stock witnessed outsized gains, will test investor appetite, compounded by lower liquidity relative to peers and sparse analyst coverage.

Previously, the conglomerate had attributed the small free float to the Adani family holding nearly 75 per cent of Adani Enterprises. Early in this year it said that planning to increase the free float.

The shares in Adani Enterprises have jumped 134 per cent in the year to date, which gave it a market value of around 55.5 billion dollar. India’s NSE Nifty 50 index rose just 5.1 per cent over the same period. It added Adani’s flagship in the gauge during September.

Presently, that valuation of Adani Enterprises at which it is being traded is 164 times of its one-year forward earnings. Nifty, in comparison, is trading at a multiple of about 20 times and Reliance Industries being the largest firm in India by market value is trading at around 21 times, according to the media report.

The details of the fundraise along with the size and timing which may still change and deliberations are ongoing, the report added.

The company will hold board meet on 25 November in order to discuss raising funds, said the company in an exchange filing on 22 November.

Adani’s group planning to raise nearly 10 billion dollar in new debt in the coming year as the conglomerate seeks to refinance its high-cost borrowings and fund projects in the pipeline. The effort may initiate in the ongoing December quarter.

Gautam Adani being the third richest person on planet, has made forays into a diverse array of businesses with dealmaking recently. Adani spearheaded a 10.5 billion-dollar acquisition of Holcim’s local cement assets, making it India’s second biggest deal of the year.

Also, the firm is making a bid to take over New Delhi Television (NDTV), with the disclosure of an indirect 29.2 per cent stake in the broadcaster. This triggered an open offer that launched on 22 November and will run until 5 December.

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Adani Enterprises Joins Adani Ports In 50 Stock Club

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Adani Enterprises would be replacing Shree Cements with its entry in Nifty 50 index. Today it has a market cap of Rs 4.1 lakh crore.

Aiming to establish diverse new businesses, Adani enterprises is all set to make entry in the Nifty 50 index from September 30. The flagship entity of Adani Group and an incubator would be replacing Shree Cements with its entry in the index.

After Adani Ports & SEZ, this will be the second Adani Group entity that will be a part of Nifty. Seven companies from the group already feature among the 50 biggest companies in India.

Despite Adani Enterprises drawing not much attention among Adani Group of companies, the returns it has delivered are good in numbers. Data of the last three years says, delivering around 2,400 percent returns made Adani Enterprises today the 11th biggest listed company in India with a market cap of Rs 4.1 lakh crore. During same period, Nifty 50 in total delivered meagre 46 percent returns.

Apart from Adani Enterprises’ unreasonable valuations, investors and analysts still continued to praise its business, says market experts. In media reports the company is termed as “the goose that lays golden eggs”.

The chairman and founder of Adani Group, Gautam Adani during his recent speech said that Adani Group foresee an investment of 100 billion dollars over coming decade keeping green energy space as priority.

Majorly it will come through Adani Enterprises via its subsidiary Adani New Industries Limited. The firm will be handling its venture into renewable energy, green hydrogen and downstream products like ammonia, urea and methanol.

Along with that, managing airports, data centres, building roads and defence equipment are some projects that Adani Enterprises covers. Analysts say, these businesses are on the verge of gaining momentum and should be value accretive in the short to medium term.

Also, Adani Enterprises will be seen in the Nifty 50 Shariah index. Whereas on the other hand, Adani Total Gas is being included in the Nifty100 Alpha 30 index and Adani Wilmar in Nifty500 Shariah index.

Ever since its entry on March 27, 2020 until its exit, Shree Cement could deliver 21 percent returns only. However, it should be noted that during this period the Indian economy was not performing well due to the pandemic, which negatively impacted many other stocks too.