Adani Wilmar share price target: Hedging losses hit Q4 margin; stock still a Buy?

Nuvama Institutional Equities said Adani Wilmar's Q4 margin disappointed due to hedging losses. It said trends in raw material (RM) prices and any near term risks from local players are key things to watch out for. For now, the brokerage has retained its 'Buy' rating on Adani Wilmar Ltd but said it would revisit estimates and target price post the earnings conference call.

Adani Wilmar, it said, has made significant improvement in its distribution infrastructure in the southern region. In FY24, the HORECA segment crossed Rs 400 crore of revenue with an estimated addressable market of Rs 65,000 crore for edible oil and foods – implying immense opportunity for growth.

"The challenges faced by the company in Bangladesh operations have been overcome with the improved forex situation and fundamentals of the economy. The operations have come back to normalcy this quarter," it said.

As far as the quarterly earnings is concerned Adani Wilmar’s revenue and Ebitda declined 4.6 per cent and 0.5 per cent YoY, respectively. But its profit after tax (PAT) grew 67.5 per cent YoY and the company reported Ebitda margins of 2.7 per cent, flat YoY but down 123 bps QoQ.

"Other expenses grew 35 per cent YoY/25 per cent QoQ mainly on account of net impact loss of Rs 207 crore on commodity derivatives. Edible oil witnessed 11 per cent YoY volume growth – however due to negative pricing, sales declined by 6% YoY. Foods and FMCG witnessed 9 per cent/16 per cent YoY volume/value growth. Industry essentials witnessed a decline of 22 per cent/12 per cent YoY in volume/value terms," Nuvama said.

For now the brokerage has a 12-month target price of Rs 480 on Adani Wilmar. The price target suggests 34 per cent potential upside over Tuesday's closing value of Rs 357.45.