Adani Enterprise Limited, started in 1988, is part of the Adani group, which is among Bharat's top business houses with an integrated energy and infrastructure platform in Bharat. They have, over the years, seeded new business interests for the Adani group, developed them into sizeable and self-sustaining business verticals and subsequently demerged them into independently listed and scalable platforms, thereby unlocking value for the shareholders. Company continues to add new companies to the portfolio with an objective to address the growing needs of India. These businesses possess a complement of scale, strategic importance, sustainable processes and technology sophistication. For example, since inception, they have incubated six decacorn businesses and successfully listed them, including by way of demergers, as Adani Ports and Special Economic Zone Limited, Adani Power Limited, Adani Transmission Limited, Adani Green Energy Limited, Adani Total Gas Limited and Adani Wilmar Limited. Each of these companies have large scale operations in Bharat with credible credit ratings. The current business portfolio includes:1) Energy and Utility: They are setting up a green hydrogen ecosystem with an objective to incubate, build and develop an end-to-end integrated ecosystem for the manufacture of green hydrogen, which includes manufacturing renewable energy equipment such as wind and solar modules to reduce the cost of renewable power, to the production of renewable energy and green hydrogen itself, and transformation of a part of the green hydrogen produced into derivatives, including green nitrogenous fertilizers, ammonia and urea, both for the domestic market and exports. They develop data centers with an aim to retain and drive Bharat's internet-derived data in India. They are also developing infrastructure projects that enhance water treatment and use efficiency.2) Transport and logistics: As part of the airports business they manage prominent airports in Bharat. They currently develop, operate and manage seven operational airports across the cities of Mumbai, Ahmedabad, Lucknow, Mangaluru, Jaipur, Guwahati and Thiruvananthapuram, and one greenfield airport in Navi Mumbai. They also develop infrastructure projects such as roads in Bharat. As of September 30, 2022, they had 14 road assets in Bharat of which three assets have started commercial operations.3) Consumer: They manufacture, market and brand food FMCG products. Additionally, they are developing a super-app, 'AdaniOne', as part of the digital business to complement Adani group's consumer serving businesses.4) Primary industry: They offer mining services which involves contract mining, development, production-related services and other related services to mining customers primarily in the coal and iron ore industries. To cater to the high demand for coal in Bharat, they offer integrated resource management services of coal which involves the access of coal from diverse global pockets and providing just-in time delivery to Indian customers. They have also recently acquired commercial mines to conduct commercial mining activities.Under industrials, they intend to manufacture petrochemicals, copper and similar metals, and manufacture strategic military and defence products that enhance Bharat's self-reliance. As per financial performance, Adani Enterprise Limited has posted total income/net profits of Rs 44,086 Cr / Rs 1,039 Cr (FY20), Rs 40,290 Cr / Rs 1,045 Cr (FY21) and Rs 70,432 Cr / Rs 787 Cr (FY22) and Rs 79,507 Cr / Rs 901 Cr (6M FY23). So as per last three years data, company has shown good sales growth, but net profit remained zig-zag. They have posted an average EPS of Rs 8.05 and average RoNW of 4.26% for last three fiscals. Issue is priced at a P/BV of 10.32 as per NAV of 317.34 on 30.09.22. If we attribute earnings of FY22 on fully diluted equity post issue, then asking price is at a P/E of around 500, and if we take annualized FY23 earnings than P/E is around 218. As per RHP, there are no listed peers. On BRLM's front, 10 lead managers are associated with this IPO, and have handled around 97 IPOs in last three fiscals. As per financials, AEL has shown good sales growth, but net profit remained zig-zag, RoNW is 2.93% and P/E is respectively 218 and 500 as per annualized FY23 and FY22 earnings, which looks aggressively priced. AEL is adding new companies with the growing needs of Bharat. Adani group is one of the top group of Bharat. Past performance shows this group has given great rewards to its shareholders. So, we give NEUTRAL rating for this FPO, one may invest for long term wealth creation.
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