AWL Agri Business shares fall as Q1 profit drops 24%; Buy stock, says ICICI Sec, Nuvama

Shares of AWL Agri Business Ltd (formerly Adani Wilmar) dropped over 1 per cent in Wednesday’s trade after the edible oil major reported a 24 per cent year-on-year (YoY) decline in its net profit for the June quarter. The company's bottom line was hit by surging input costs, which overshadowed strong revenue growth.

The company's net profit for the first quarter of FY26 stood at Rs 236 crore, down from Rs 313 crore in the corresponding quarter of the previous year. AWL Agri Business's net sales saw a healthy increase of 20.5 per cent to Rs 17,058 crore, largely driven by higher realisations in its edible oil segment.

However, profitability came under severe pressure as total costs escalated by 23 per cent YoY to Rs 16,954 crore. Consequently, the company's earnings before interest, taxes, depreciation, and amortisation (EBITDA) tumbled by 41.5 per cent to Rs 366 crore. 

Following the earnings announcement, the AWL Agri Business stock fell 0.59 per cent, or Rs 1.55, to trade at Rs 261.70 on the BSE at 02:11 pm. The scrip had hit an intraday low of Rs 259.90 earlier in the session, marking a decline of nearly 1.2 per cent from its previous close of Rs 263.25.

Despite the weak operational performance, leading brokerages Nuvama Institutional Equities and ICICI Securities have maintained their 'BUY' ratings on the stock, citing recovery prospects and long-term growth drivers.

Nuvama noted that while revenue grew 20 per cent YoY on strong pricing, EBITDA saw a sharp 41 per cent YoY decline due to elevated input costs. Overall volumes for the company fell 5 per cent YoY, impacted due to underperformance in rice (G2G business discontinued post-Q3 FY25) and sluggish palm sales.

The brokerage said that the Food & FMCG segment posted its highest-ever Profit Before Tax (PBT) of Rs 75 crore, with a PBT margin of 5.3 per cent.

"Factoring in a weak Q1, we are cutting FY26E/27E EBITDA by 6.8 per cent/5.3 per cent. Rolling forward our estimates to FY27, we derive an SotP-based target price of Rs 397 (earlier Rs 401); maintain ‘BUY’," Nuvama said in its report.

Meanwhile, ICICI Securities expects a recovery in the edible oil business, aided by supportive policy changes and normalising palm oil prices. It also highlighted double-digit volume growth in branded Basmati rice, and Q-commerce revenue grew 75 per cent YoY, with alternate channels now contributing over Rs 3900 crore.

"Our earnings estimates are largely unchanged for FY26-27E; modelling reported revenue / EBITDA CAGR of 8 per cent/-1 per cent over FY25-27E. Maintain BUY with an SoTP-based unchanged target price of Rs 360," the brokerage said. Key risks, it said, include volatility in raw material prices and failure to scale up the foods business.