The majority of Adani Enterprise share price fell drastically on the news of the FPO cancellation on Wednesday.

Adani Enterprise share price announced late on Wednesday that it has decided not to move forward with its fully subscribed Follow-on Public Offer (FPO), hours after the company’s shares dropped 28.45% to close at 2,128.70 on the BSE. Following explosive accusations of accounting fraud made last week by US short-seller Hindenburg Research, billionaire Gautam Adani’s business has lost more than $100 billion.

What is FPO? 

Adani enterprise share price When a business that is already listed on an exchange issues fresh shares to investors, this occurs. An FPO can be used by businesses to lower debt or raise additional funds for growth.

Adani enterprise share price Dilutive follow-up public offers and non-dilutive follow-up public offers are the two types of FPOs.

In a dilutive FPO, the corporation issues additional shares to the public, but the company’s overall valuation stays the same. Earnings per share (EPS) in dilutive FPOs are impacted by the increase in the number of shares.

In a non-dilutive FPO, existing shareholders sell off their shares. Due to the fact that this sort of FPO does not result in an increase in the number of shares of the company, EPS is unaffected.

What is an IPO?

An initial public offering, also known as an IPO, occurs when a business lists on a stock market and initially makes its shares available to the general public. By purchasing corporate shares, a person gains partial control of the business.

As the name implies, an initial public offering (IPO) is the first issue, whereas a follow-on offering (FPO) is the second issue.

IPO vs. FPO

The risks associated with investing in an IPO are far higher than those associated with an FPO. After an FPO, a company’s financial information and prior performance are available, whereas an IPO necessitates more background investigation into the business.

How to invest?

Adani enterprise share price Adults may apply for both FPOs and IPOs through the Retail Individual Investors (RIIs) allocation if they have a PAN card and a demat account. Either a broker’s or a bank’s Application Supported by Blocked Account (ASBA) facility can be used to purchase shares.

Although IPOs have a greater potential to generate bigger returns due to the risk aspect, experts advise making an investment decision only after thoroughly examining the market, one’s own financial objectives, and risk tolerance.

Following the cancellation of the FPO, the majority of Adani Enterprise share price has fallen.

Adani enterprise share price After major international banks Citigroup and Credit Suisse stopped accepting Adani firm securities as collateral for margin loans, the majority of Adani Enterprise share prices were today restricted to their respective lower circuit limits.

The shares of the conglomerate’s flagship company, Adani Enterprises NSE -26.7%, were the hardest hit, falling 26.5% to Rs 1,564.7 on the BSE before reaching a 52-week low. Adani Enterprises’ Rs 20,000 crore fell 10.0% FPO and was withdrawn late last night.

The 10% lower circuit limits were reached by three of billionaire Gautam Adani’s stocks: Adani Transmission NSE fell 10.0%  to Rs 1,557.25; Adani Transmission NSE fell -10.0% to Rs 1,038.05. NSE Adani Green Energy fell 10.0% to Rs 1,557.25.

Shares in the group’s cash cow, Adani Ports NSE -6.6%, ended 6.1% lower at Rs. 462 before falling to a new 52-week low of Rs. 423.

However, lower circuit restrictions of 5% were locked in for NDTV NSE -4.99%, Adani Power NSE -4.98%, and Adani Wilmar NSE -5.0%.

Adani enterprise share price After the conglomerate stated that the promoters had not pledged their ownership, the two new acquisitions made by Adani—ACC NSE 5.52% closed marginally higher at Rs 1,855 and Ambuja Cements NSE 5.52% ended 5.3% higher at Rs 352.45—performed slightly better.

Adani stock prices have plummeted up to 62% from their all-time highs amid the turmoil.

The turmoil for Adani stock worsened after American short seller and whistleblower Hindenburg Research made numerous charges last week. Yesterday, Credit Suisse stopped recognizing Adani bonds as collateral.

Adani was compelled to make a surprising announcement last night, withdrawing the FPO as the stock meltdown grew worse. It was revealed this morning that Citi’s wealth division also chose to reduce the loan-to-value ratio for financing secured by Adani securities to 0%.

“Everything is secondary to my investors’ interests, which are my first priority.” Therefore, we withdrew the FPO to protect investors against future losses. The board firmly believed that moving forward with the FPO would not be morally right. In a video statement to shareholders this morning, Adani stated

Adani said the choice will not affect current operations or future plans but that he will review the capital market approach once the market stabilizes.

“Our business has solid foundations.” Our assets and balance sheet are both strong. We have an excellent track record of debt repayment, and our EBITDA and cash flows have been very consistent. Our continued attention will be on creating long-term value, and internal accruals will control expansion.  In an effort to reassure investors, Adani stated

“We place a lot of emphasis on ESG, and each of our businesses will continue to add value in an ethical manner.” “The numerous worldwide alliances we have established across our various organisations provide the strongest validation of our governance principles,” added the 60-year-old.

The Board would like to thank all of the investors for their dedication to and support of our FPO. Yesterday, the subscription for the FPO was successfully closed. Your trust and confidence in the company, its operations, and its management have been incredibly encouraging and humbling, notwithstanding the recent volatility in the stock. In a press release, Adani expressed his gratitude.

The market capitalization of all 10 listed Adani companies has decreased by more than 40%, or Rs 8.3 lakh crore, over the past six trading days. After a remarkable surge over the past few years, shares of Adani Enterprises are now roughly 50% below their 52-week high.

Adani Transmission, Adani Green Energy, and Adani Total shares all saw declines of 10%, while Adani Enterprises shares fell by 8%. While Adani Ports experienced a 2.7% decline, Adani Power and Adani Wilmar experienced declines of 8.3% and 5%, respectively.

Gautam Adani’s net worth continued to plummet as a result of the significant decline in the group’s stock, and as of Thursday noon, he had dropped to the 16th position on the Forbes billionaire list with a net worth of $69.2 billion.

In US trade, the company’s bonds fell to distressed levels.

Following a report by Hindenburg Research last week alleging stock manipulation and inappropriate use of offshore tax havens by the Adani Group, the shares of the group’s firms have continued to drop. The research company also expressed concern about the valuations of the seven listed Adani companies and their high debt levels.

The charges have been refuted by Adani Group, which claims that the short-claim seller’s claim of stock manipulation is unfounded and reflects a lack of legal knowledge. It said that it has always provided the relevant regulatory disclosures.

100 billion dollars have been lost. Following the deadly Hindenburg shelling, Adani Bulls is calculating its costs-

Following explosive accusations of accounting fraud made last week by Hindenburg Research, which the company has denied, Gautam Adani’s enterprise has lost more than $100 billion.

Investors in Adani equities have a $100 billion hole in their pockets thanks to a 106-page research report by American short-seller Hindenburg Research, whose losses are rising daily.

The market capitalization of all 10 Adani Group companies has so far decreased by 43% in the previous six trading days since the whistle-blower’s report was made public last Wednesday. This equates to a loss of Rs 8.3 lakh crore, or around $100 billion.

Due to the substantial decline in market value, Mukesh Ambani, the chairman of Reliance Industries and a fellow Gujarati businessman, has overtaken Adani as the richest man in India and Asia.

According to data from Forbes, Adani, who was briefly the second-richest person in the world in 2017, is currently ranked 16th on the list of the world’s top billionaires. Currently, it’s estimated that the 60-year-old college dropout is worth somewhere over $69 billion.

Adani Enterprises, the group’s main company, hit a 52-week low earlier in the day before ending the day 26.5% lower at Rs. 1,564.7 on the BSE.

The 10% lower circuit limits were reached by three of billionaire Gautam Adani’s stocks: Adani Transmission NSE dropped 10.0% to Rs 1,557.25; Adani Transmission NSE dropped -10% to Rs 1,038.05. Adani Green Energy fell 10.0% to Rs 1,557.25 on the NSE.

Shares in the group’s cash cow, Adani Ports NSE -6.6%, finished 6.1% lower at Rs. 462 before falling to a new 52-week low of Rs. 423.

On the other hand, lower circuit limitations of 5% were set for NDTV, Adani Power NSE (4.98%), and Adani Wilmar NSE (5.0%).

In the meantime, market regulator Sebi was reportedly investigating the decline in Adani Group stock and any potential violations in the FPO, which has since been cancelled. Another source claims that the Reserve Bank of India (RBI) has also requested information from banks regarding their exposure to Adani entities, the majority of which have significant leverage.

Even today, the subject was brought up in the Indian Parliament. After opposition parties shouted for a discussion of the Hindenburg report, the Lok Sabha’s business was suspended until two o’clock.

Despite all of the issues, Adani has insisted that the foundation of his businesses is solid.

What effects will Adani Enterprises’ FPO cancellation have on its plans for an airport, a road, and green hydrogen?

The battered Adani Group’s incubator, Adani Enterprises Ltd (AEL), intended to invest Rs 3,335 crore from its follow-on public offering (FPO) in the final two months of the current fiscal year 2022–23 and Rs 7,535 crore over the following 14 months.

Adani Group, with its headquarters in Ahmedabad, may now be forced to raise expensive loans or scale back its aggressive expansion ambitions due to the present stock market mood toward the company.

The FPO money was to be distributed in two equal amounts: half at the time of application and the other half over the course of two subsequent calls.

AEL withdrew their Rs 20,000 crore FPO late Wednesday night. According to the company, it will return the funds it had raised from institutional and HNI clients. However, interest from retail investors was minimal.

The Rs 10,869 crore FPO funding was intended to be used for a number of projects involving the green hydrogen ecosystem, renovations to some current airport facilities, including the Ahmedabad Airport Project, and the building of a greenfield motorway under its road and highway subsidiary.

The company disclosed to investors that it has also set aside Rs 4,165 crore for loan repayment. The debt was owed by affiliates such as Mundra Solar Limited, Adani Road Transport Limited, and Adani Airport Holding Limited. If there is no rollback of loans, the corporation must immediately make arrangements for borrowing from banks and institutions, according to sources.

AEL, which serves as the group’s holding company, has launched new enterprises in capital-intensive industries like solar energy, the green hydrogen ecosystem, data centers, airports, roads and highways, defense and aerospace, and water. Actually, the company had planned to generate money to support these new surprise enterprises.

Businesses including Adani Transmission, Adani Power, Adani Ports, Adani Green, Adani Total Gas, and Adani Wilmar were successfully nurtured over the years by the flagship AEL. These companies are currently listed on the market on their own.

The future unlocking and listing of the next set of these new enterprises was made possible by the fact that AEL was enjoying a high market valuation (current price to multiple of over 200 times) in the market.

Following the report from the short seller, Hindenburg, the market price of AEL has been dropping like a nine-pin. In the past eight trading days, the stock has plummeted from Rs 3,389 to Rs 1915.

The group’s chairman, Gautam Adani, stated in a video message that the FPO withdrawal will have no bearing on the group’s current activities or future plans. He continued, “We will continue to focus on timely execution and delivery of projects,” noting that the company’s foundation is solid.

The market value of AEL is Rs 56,200 crore. In 2021–2022, the company expects to make a net profit of Rs. 787 crore on consolidated revenues of Rs. 70,432 crore.

In order to provide affordable renewable energy and to manufacture affordable green hydrogen, the company is establishing an integrated green hydrogen ecosystem. Additionally, there are plans to produce downstream components for the green hydrogen ecosystem.

FAQS-

1. What is happening with the Adani Group?

The Adani group’s enterprises’ market capitalization has dropped by nearly Rs 7 lakh crore as a result of allegations of “brazen stock manipulation and accounting fraud” in a study conducted by the US-based Hindenburg Research. Following the collapse in Adani shares, bank stocks were also negatively impacted.

2. Why did the Adani FPO cancel?

According to Gautam Adani, the Adani Board firmly believed that moving forward with the FPO would not have been morally acceptable given yesterday’s market turmoil. Late Friday night, Adani Enterprises made the decision to cancel its 20,000 crore share sale.

3. Is FPO advantageous to shareholders?

Because it bears less risk than IPOs, investing in FPOs is regarded as a safe alternative. However, they are more trustworthy because the company is already listed on the stock exchange and investors have access to more information about it.

4. Why are Adani’s shares falling right now?

The Adani group’s enterprises’ market capitalization has dropped by nearly Rs 7 lakh crore as a result of allegations of “brazen stock manipulation and accounting fraud” in a study conducted by the US-based Hindenburg Research. Following the collapse in Adani shares, bank stocks were also negatively impacted.