Rode the Adani Wilmar stock rally in 2022? Rs 1,000 target is still possible!

Shares of Adani Wilmar have more than doubled since their listing, outperforming the benchmark indices and its sectoral peers in 2022. The shares of Adani Wilmar listed at a 3.91% discount at Rs 221 to their issue price on February 8, 2022. Since then, investors have reaped 150.67% returns till date. The stock traded at Rs 554 level on BSE today.

However, the Adani Wilmar stock is trading 37% lower to the record high of Rs 878.35 on April 28, 2022.

The trend is negative in the short term also. In one week, the stock has lost 13.53%. Adani Wilmar shares have been falling for the last seven sessions. In the current session too, the stock fell 6.35% intraday to Rs 550.5 on BSE.

Adani Wilmar stock is trading lower than the 5-day, 20-day, 50-day, 100-day and 200-day moving averages. Market cap of the Adani Group firm fell to Rs 71,943 crore on BSE. A total of 2.82 lakh shares of the firm changed hands amounting to a turnover of Rs 15.95 crore on BSE.

The Adani Wilmar stock has a Relative Strength Index (RSI) of 27.4. A value below 30 indicates that a stock is oversold and a value above 70 signals that the scrip is overbought.  Hence, the stock oversold rating in terms of RSI. The firm's stock has a price to equity ratio of 94.56. This signals that the stock is overvalued.

Shares of Adani Wilmar have lost 21% since the Q2 earnings were announced on November 3 this year. The stock ended at Rs 698.45 on November 2.

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The Adani Group firm reported a 73 per cent fall in net profit for the quarter ended September 2022. Net profit slipped to Rs 49 crore against Rs 182 crore profit in the second quarter of the previous fiscal.  However, revenue rose 5% to Rs 14,209 crore in Q2 against Rs 13,584 crore in the September quarter of the previous fiscal.

Here's a look at what analysts said about the prospects of the Adani Group stock which remained volatile through 2022.

Abhijeet from Tips2trade said, "Post a stellar listing in Feb 2022 due to strong brand name and market share, Adani Wilmar had a good run in 2022 compared to the majority of other recently listed companies. However, 2023 might see a slight dip in the stock price up to Rs 538-540 levels, which will act as a strong support zone. These levels can be used to buy for targets of Rs 710-825 in the near term. A weekly close above Rs 825 could lead to even Rs 1,000 in 2023."

Manoj Dalmia, Founder & Director at Proficient Equities said, "Adani Wilmar reported a revenue growth of 4.3% YoY/-3.9% QoQ to Rs 1,41,500 million in Q2FY23. Volumes increased by 9% YoY, with food, FMCG, and industry essentials seeing the most growth. EBITDA decreased by 41% YoY and 22% QoQ during the quarter, ending at Rs 2,538 mn. The company's margins were hurt by a number of challenges, such as the significant volatility of edible oil prices, the allocation of a reduced TRQ (Tariff Rate Quota), and inflation. The stock looks weak currently but investors can accumulate at Rs 550 and expect some consolidation at that level."

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Vinit Bolinjkar, Head of Research, Ventura Securities said, "Despite its higher valuation and rally in the Adani Wilmar stock price, we continue to remain positive on the stock given the fact that the food category is a large space that is significantly underpenetrated and has decadal growth opportunities ahead. Despite advertising push in the Indian food industry, only 12% of atta, 5% of sugar, 5% of rice (mostly basmati) and 8% of pulses are sold branded. It offers a significant growth opportunity for branded food players, such as AWL to expand the market in an unorganized space. AWL processes 2.5 mn metric tonnes of edible oil every year (soyabean oil, palm oil, sunflower, mustard, groundnut, cottonseed and blended oils under the Fortune brand), and is now targeting branded sugar, atta, dal and besan to enhance its market share. AWL is sacrificing immediate profitability to grow rapidly and gain market share. Further, the company is scouting for acquisitions that will help it to grow faster than the industry pace."

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