Adani Enterprises Limited (AEL) FPO Review:

Adani Enterprises Limited (AEL) incorporated on March 2, 1993, the flagship company of Adani Group, is one of the fastest-growing diversified businesses providing an extensive range of products and services. The Company is engaged in mining & services, resource logistics, new energy supply chain including solar module and cell manufacturing, transport & logistics business like airports and roads, utilities like water and data centres, and edible oil and food businesses.

Adani Enterprises Limited

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It also operates as an incubator, establishing new businesses in transport & logistics and energy & utility sectors, apart from increasing focus on direct-to-consumer businesses. Since inception, they have incubated 6 decacorn businesses and successfully listed them, including by way of demergers, as Adani Ports and Special Economic Zone Ltd, Adani Power Ltd, Adani Transmission Ltd, Adani Green Energy Ltd, Adani Total Gas Ltd, and Adani Wilmar Ltd. As on 31st March 2022, the Company has 150 subsidiaries (direct and indirect including LLPs) and 3 associate companies.

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Promoters & Shareholding:

Gautam S. Adani and Rajesh S. Adani are the promoters of the company. 

Pre Issue Share Holding72.63%
Post Issue Share Holding

Public Issue Details:

Offer for sale: Fresh of approx. 64,738,475 equity shares at Rs. 1, aggregating up to Rs. 20,000 Cr.

Total FPO Size: Rs. 20,000 Cr.

Price band: Rs. 3112 – Rs. 3276.


  1. Funding capital expenditure requirements – Rs. 10,869 Cr.
  2. Repayment, in full or part, of certain borrowings – Rs. 4,165 Cr.
  3. General corporate purposes.

Bid qty: minimum of 4 shares (1 lot) for Rs. 13,104 and maximum of 15 lots.

Offer period: 27th Jan 2023 – 31st Jan 2023.

Date of listing: 8th Feb 2023.

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  1. It is a business incubator with a demonstrated track record of incubating sustainable infrastructure businesses.
  2. Demonstrated track record and expertise in project execution and management.
  3. Tapping on the growing green hydrogen potential in India to build a fully-integrated green hydrogen ecosystem in India.
  4. One of the leading global players in integrated resource management.
  5. Experienced promoters and strong leadership.


  1. The limited operating history of some of our businesses may not serve as an adequate basis to evaluate their prospects.
  2. Any failure to execute our green hydrogen strategy could harm its operations.
  3. Its inability to obtain approvals, licenses, or permissions, and any non-compliance with the conditions specified under its existing approvals, licenses, or permissions, may adversely affect its operations.

Subscribe or avoid?

Sectorial outlook – As per the International Energy Agency’s (“IEA”) energy outlook for the Indian market under its Stated Policies Scenario, India is expected to overtake the European Union (“EU”) as the world’s third-largest global energy consumer by 2030 and will account for nearly a quarter of global energy demand growth over 2019-2040. However, dependence on conventional sources alone to meet this requirement will not only result in higher import bills but also higher emissions. Hydrogen is becoming increasingly crucial to achieving decarbonization, especially in hard-to-abate sectors such as steel, fertilizers, refining, shipping, etc. This has resulted in increased momentum around the globe for deploying clean hydrogen-based projects, with the global investment pipeline surpassing $500 billion in mid-2021, as per the Hydrogen Council. Currently, India’s hydrogen demand is approximately 6 million tonnes, mainly contributed by the fertilizers and refining sectors. The National Hydrogen Policy which was launched on India’s 75th Independence Day of India has significantly addressed the issues of higher renewable energy tariffs as well as lowering electrolyzer costs through incentive schemes. All of the above are expected to have a positive impact on the sector the company is heavily investing in.

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The financials (revenue and net profit) are shown in the graph below:

Valuation – For the last 3 years average EPS is Rs. 8.6 and the P/E is around 380x on the upper price band of Rs. 3276. The EPS for FY22 is Rs. 7.21 and the P/E is around 454x. If we annualize Q2-FY23 EPS of Rs. 8.23, P/E is around 199x. it does not have listed peers as per the RHP. The company’s P/E is between 380x and 199x. ROA is around 3.32%, and ROE and ROCE are currently 15.23% and 22.52% respectively. Revenues and EPS have been growing consistently but the margins being low are a cause for concern. 

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Recommendation – The Company is one of India’s largest listed business incubators in terms of market capitalization. It has a very diverse business portfolio and is heavily investing in building up the H2 ecosystem which can pay dividends since the rapidly changing geopolitical situation, especially in Europe, has raised the imperative for hastening the implementation of alternative green energy sources.   

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After considering all the factors the listing still seems to be fully priced looking at its current financials but if the company’s vision to become the lowest-cost producer of green H2 is realized then it could become extremely profitable with the lion’s share of the market hence we are would recommend this FPO a “Avoid” to Investors.


This article should not be construed as investment advice, please consult your Investment Adviser before making any investment decision.

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