Adani Wilmar Ltd witnessed a significant drop in its share price during early trading on Friday, with a decline exceeding 9%. As of the latest update, the stock was trading at Rs 292.90, marking a 9.45% decrease. This downturn is primarily attributed to the commencement of the promoter Adani Commodities LLP’s two-day offer for sale (OFS).
The stock has been exhibiting bearish trends recently, having depreciated by almost 10% over the preceding five trading sessions. Furthermore, it has experienced a substantial 12.28% value erosion over the past six months, indicating sustained market pressure.
The floor price for the OFS was strategically set at Rs 275, which represents a considerable 15.11% discount compared to Thursday’s Bombay Stock Exchange (BSE) closing price of Rs 323.95. This substantial price reduction acted as a major drag on the stock’s performance, triggering a 9% fall in early trading sessions as investors reacted to the discounted offer. Looking at a broader timeframe, the stock has decreased by 18.69% over the last year and has lost nearly half of its value (47%) in the preceding two years, highlighting a prolonged period of underperformance.
Adani Commodities LLP is offering up to 175,456,612 shares through this OFS. This volume constitutes a significant 13.50% of Adani Wilmar’s total issued and paid-up equity share capital. The OFS structure is segmented, with non-retail investors having the first opportunity to subscribe today, while retail investors will be able to participate on Monday, January 13th.
To further facilitate the offering and potentially increase subscription rates, non-retail investors are also provided with the option to carry forward any unallotted bids to Monday. This allows them to be considered for allocation from any unsubscribed portion within the retail category, potentially maximizing the OFS’s success.
In addition to the base offering, Adani Commodities LLP has also announced a greenshoe option to sell up to an additional 84,479,110 shares. This represents a further 6.50% of the company’s equity share capital, providing flexibility and the potential for increased capital raising.
If this oversubscription option is fully exercised, the total number of shares offered under the OFS, encompassing both the base size and the additional shares, will reach a substantial 20% of Adani Wilmar’s total equity share capital. This translates to a total of 259,935,722 shares potentially being offered to the market.
Adani Enterprises, the parent entity of Adani Wilmar, has broader strategic plans to divest its entire 44% stake in Adani Wilmar eventually. The estimated value of this complete stake sale is around $2.2 billion. Market analysts interpret this strategic divestment as a move aimed at enhancing liquidity within Adani Enterprises, providing them with greater financial flexibility.
Ventura Securities, in a recent analysis, underscored the potential advantages arising from this transaction. Their report suggests that the substantial proceeds generated from the stake sale could be strategically deployed to secure additional debt. This could potentially create a significant capital pool ranging from Rs 50,000 to Rs 52,000 crore. Such a substantial corpus would empower the Adani group to fortify its overall financial standing and optimize its capital management strategies in the long term.
Adani Wilmar, in its official communication to stock exchanges, clarified that this OFS is partly driven by the necessity to comply with regulatory mandates. Specifically, as per Rule 19(2)(b) and Rule 19A of the Securities Contracts (Regulation) Rules, 1957, and Regulation 38 of SEBI’s Listing Obligations and Disclosure Requirements, listed companies are obligated to meet the minimum public shareholding norms. This regulatory compliance is a key factor behind the timing and execution of this Offer For Sale.
