ICICI Securities has initiated its coverage on Adani Wilmar with a 'Hold' rating and an SoTP-based target price of Rs 550. On Wednesday, the scrip closed 5 per cent higher at Rs 636.55 against the previous close of Rs 606.25. Market cap of the company rose to Rs 82,731.04 crore.
The brokerage firm expects the edible oil business to witness a 10 per cent volume growth CAGR over FY22-24E (including the impact of the Bangladesh acquisition). "In FY23E, we expect volume growth of 11 per cent with some benefit of full-year consolidation of Bangladesh – we note Bangladesh operations are mainly in the edible oil segment. For FY24E, we expect volume growth of 9.0 per cent in the edible oil business," it said.
It highlighted that strong competitive advantages (price-laddering, oil segments, scale, market intelligence (courtesy Wilmar)) in edible oil will provide Adani Wilmer with an edge over the competition.
Further, it added that Adani Wilmar enjoys multiple synergies across all three business segments which augur well for scale up of packaged foods business – a) scale in procurement & logistics, b) brand recall of ‘Fortune’ and c) readily available distribution and mix-load supply chain benefit from edible oil.
The stock hit an all-time high of Rs 878.35 on April 28, 2022. Currently, it is trading 27.5 per cent down from its all-time high.
Adani Wilmar reported a profit of Rs 234.3 crore for the quarter ended March 2022 against a net profit of Rs 315 crore in the year-ago period.
However, the company clocked a 40 per cent YoY rise in its consolidated revenue from operations to Rs 14,960.4 crore in Q4 against Rs 10,672 crore in the same quarter last fiscal.
Adani Wilmar Ltd is a joint venture between Adani Group and Wilmar Group of Singapore. It is engaged in the manufacturing of edible oil, wheat flour, rice, pulses and sugar. The company also owns the popular brand Fortune, which is the largest selling edible oil brand in India.
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