Adani Wilmar Gives 155% Returns to Investors This Year So Far; Should you Book Profit Yet?

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Adani Wilmar Shares Today: Amid macro headwinds, Adani Wilmar‘s June earnings largely were in-line with the analysts’ expectations. However, the scrip fell over 2 per cent on Thursday after the edible oil major posted a 10 per cent rise in consolidated net profit at Rs 194 crore for the quarter ended June as the company’s sales and volumes improved during the quarter. Adani Wilmar’s revenue from operations rose 30 per cent year-on-year to Rs 14,731.62 crore during the quarter as the volumes increased 15 per cent on-year to 1.19 million metric tons. So far this year, Adani Wilmar stock has rallied over 155 per cent and analysts see further upside as according to them an improving margin profile with volume growth augurs well for the long term for the Adani Group company. Adani Wilmar shares were quoting at Rs 681 on NSE, down 2.5 per cent from the previous close.

After the Q1 earnings, Angshu Mallick, Managing Director, and CEO of Adani Wilmar Limited said, “Adani Wilmar has continued to demonstrate a steady growth on overall volumes, led by an exceptional growth in the foods business. This is despite multiple headwinds that we saw during the quarter with inflation and low consumer offtake being the major concern areas. Our growth has been driven by GTM strategy focused on increased penetration in the semi-urban & rural regions. This increased penetration is also enabling us to grow the foods business at a faster pace.”

 Should You Invest?

But the stock may have run too fast too soon and a few brokerages covering the stock do not see much upside for the 2022 debutant.

“In terms of prices, while there was some cool-off in edible oil prices (partly driven by government measures as well) the trajectory still continues to be volatile. In terms of demand outlook, the festive season and some expected improvement in rural demand (good monsoon led) should aid improvement. Strong competitive advantages (price-laddering, oil segments, scale, market intelligence (courtesy Wilmar)) in edible oil provide Adani Wilmar with an edge over the competition,” the ICICI Securities note stated.

Further, as per the brokerage, Adani Wilmar enjoys multiple synergies across all three business segments which augur well for scale up of packaged foods business – scale in procurement & logistics, brand recall of ‘Fortune’ and readily available distribution and mix-load supply chain benefit from edible oil.

ICICI Securities likes the potential in the HoReCa segment given Adani Wilmar’s key focus in that segment. “We like the business and have a constructive view. We increase our target price to Rs 595 (from Rs 550), downgrade Adani Wilmar shares’ rating to reduce (from hold) given the sharp run-up (+20 per cent in last 1m),” it added.

Edelweiss said Adani Wilmar’s YoY revenue growth was 9.7 per cent ahead of its estimate and that the company continues to gain market share in the edible oil, wheat and rice segments.

On the positive side, volume-led growth in segments aided the margin profile. The brokerage said edible oil volumes grew 6 per cent YoY despite inflationary headwinds and noted that the volume share of food is now at 16 per cent against 12 per cent YoY.

Kohinoor brands for HoReCa (hotels, restaurants, and catering) were relaunched in June and the relaunch of consumer brands’ in August would drive premiumisation, Edelweiss said.

The views and investment tips by experts in this News18.com report are their own and not those of the website or its management. Users are advised to check with certified experts before taking any investment decisions.

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