Adani Capital plans Rs1,500 crore Initial Public Offer

It is hard to keep an Adani company and the capital market away from each other for too long. After listing seven of its companies, including Adani Wilmar, Adani group may be all set to list its NBFC arm, Adani Capital also on the bourses. However, the listing may only happen by FY24, so it would still be some time away. The filing is yet to happen. The issue size would Rs1,500 crore and the IPO is expected to value Adani Capital upwards of $2 billion making it among the more valuable non-banking finance companies in India. 

Adani Capital is a non-bank lender backed by the Adani Group and the IPO will entail the sale of about 10% stake, so it would most likely be entirely an offer for sale. The basic idea of this listing is to be able to get currency for future inorganic growth and also have the ability to raise incremental capital from the market with ease. Currently, Adani Capital is a lender to farmers and small and mid-sized businesses. Adani Capital is a small player in India’s finance sector. It will look to capture loan market between Rs3 lakhs to Rs3 million. 

In terms of positioning, Adani Capital is not exactly positioned as a fintech company, but a credit company that effectively and smartly leverages technology. Here, the power of technology and the internet is used largely to acquire new customers in a more effectively and cost efficient manner. The model is quite interesting. It uses the Direct to Consumer (D2C) distribution model with more than 90% of the business being self-generated. The CEO, Gaurav Gupta, comes with over 20 years of experience in marquee global investment banks.

Adani Capital is of fairly recent origin. It was only launched in the year 2017 and its net income was just about Rs16.30 crore for the fiscal year FY21. Adani Capital currently has a total of 154 branches spread across 8 Indian states. It has about 60,000 borrowers and the total lending book currently stands at about Rs3,000 crore. It has also kept its bad assets in terms of the gross NPA ratio to loan book ratio of under 1. Currently, Adani Capital is looking to double the loan back each year so it is able to derive substantial traction in the business.

There are several Adani stocks that are already listed on the bourses and the combined market cap of all the listed Adani stocks on the bourse is currently valued at over $200 billion. This makes the Adani the third most valuable business group in the Indian market by market capitalization after the Tata group and the Reliance group. Among the listed entities from the Adani group on the bourses, all of them have done extremely well in terms of stock market performance and that should be a good valuation story for Adani Capital.

Some of the major outperformers in the stock markets over the last one year from the Adani group include Adani Green Energy, Adani Total Gas, Adani Transmission, Adani Power, Adani Ports and Special Economic Zone and Adani Wilmar. Their current listings are dominated by power and infrastructure players with Adani Wilmar being the only FMCG company in the listed pack. Hopefully, Adani Capital when it lists eventually will add more variety to the business spread of the group.