ICICI Securities initiates coverage on Adani Wilmar – All you need to know

With a ‘Hold’ rating and a SoTP-based target price of Rs 550, ICICI Securities has started coverage on Adani Wilmar. The stock closed at Rs 636.55 on Wednesday, up 5% from its previous closing of Rs 606.25. The company’s market capitalization increased to Rs 82,731.04 crore. 
 
The edible oil business is expected to increase at a 10% CAGR between FY22 and FY24, according to the brokerage firm (including the impact of the Bangladesh acquisition). “We forecast volume growth of 11% in FY23E, with some benefit from full-year Bangladesh consolidation – noting that Bangladesh operations are mostly in the edible oil market. In the edible oil business, we forecast volume growth of 9.0% in FY24E “it said. 
 
It stated that Adani Wilmer will have a competitive advantage in edible oil due to strong competitive advantages (pricing laddering, oil segments, scale, and market knowledge (thanks Wilmar)).

ICICI Securities

Adani Wilmar also has significant synergies across all three business areas, which bode well for scaling up the packaged foods industry: a) scale in procurement and logistics, b) brand memory of ‘Fortune,’ and c) readily available distribution and mix-load supply chain benefits from edible oil.

On April 28, 2022, the stock reached an all-time high of Rs 878.35. It is currently trading 27.5 percent below its all-time high. 
 
Adani Wilmar made a profit of Rs 234.3 crore in the quarter ending March 2022, compared to Rs 315 crore the previous year. 
 
However, the company’s consolidated revenue from operations increased by 40% year on year to Rs 14,960.4 crore in Q4 from Rs 10,672 crore the previous fiscal quarter. 
 
Adani Wilmar Ltd is a joint venture between the Adani Group and the Singapore-based Wilmar Group. Its main products include edible oil, wheat flour, rice, legumes, and sugar. Fortune is another prominent brand owned by the corporation.