Adani Enterprises stock jumps but stays below FPO price

Shares of Adani Enterprises Ltd jumped as much as 9% on Monday after the ports-to-power conglomerate issued a 413-page reply to Hindenburg Research.

Reacting to Adani Group's detailed response to the Hindenburg report, the Adani Enterprises stock rose 9% intraday to ₹3,038 apiece on the National Stock Exchange (NSE), staying below the follow-on public offer (FPO) price band of ₹3,112-3,276 per share.

The Adani group's flagship company had kicked off its ₹20,000 crore FPO on Friday. The secondary share sale by Adani Enterprises is the largest ever in the country. It opened for subscription on January 27 and will close on January 31.

Ahead of the FPO, Adani Enterprises last week raised ₹5,984.9 crore from 33 anchor investors, which include foreign as well as domestic institutional investors. The Gautam Adani-led company allotted 1,82,68,925 shares to institutional investors at ₹3,276 a share, the upper end of the FPO price band.

The anchor placement saw participation from marquee foreign investors such as Abu Dhabi Investment Authority (ADIA), Maybank Asia, Goldman Sachs, Nomura Financial, Societe Generale, Jupiter, BNP Paribas, Al Mehwar, Citigroup, and Morgan Stanley. Among domestic players, LIC of India, HDFC Life Insurance Co, SBI Employees Pension Fund, and SBI Life Insurance Co participated in the bid.

Adani Enterprises plans to use nearly ₹10,869 crore out of the ₹20,000 crore for funding capital expenditure requirements of its subsidiaries in relation to certain projects of the green hydrogen ecosystem, improvement works of certain existing airport facilities, and construction of greenfield expressway. Besides, it intends to utilise ₹4,165 crore for repayment of certain borrowings of the firm and its three arms — Adani Airport Holdings Ltd, Adani Road Transport Ltd and Mundra Solar Ltd. As of September 2022, Adani Enterprises had a total debt of around ₹40,000 crore.

Responding to Adani Group's rebuttal, Hindenburg Research on Monday said the conglomerate is shifting the focus away from substantive issues and has instead stoked a nationalistic narrative by claiming that its research report amounted to a "calculated attack on India."

"Our report asked 88 specific questions of the Adani Group. In its response, Adani failed to specifically answer 62 of them. Instead, it mainly grouped questions together in categories and provided generalized deflections," the activist short seller says, adding the core allegations of its report which focused on numerous suspect transactions with offshore entities were left completely unaddressed.

"We also note that the recent Follow On Public Offer (FPO) in Adani Enterprises contains many of the same type of Mauritius funds that we pointed out as likely being in clear violation of SEBI regulations. For example, the anchor list of Adani Enterprises investors contains a host of suspect Mauritius funds. These include: (1) Ayushmat Limited (2) Coeus Global Opportunities Fund (3) Great International Tusker Fund and (4) Aviator Global Investment," says Hindenburg Research.

The selloff in other Adani Group stocks continued on Monday, with Adani Transmission, Adani Total Gas and Adani Green Energy hitting 20% lower circuit during the intraday trade.