Adani Wilmar Share Prices Surge. Is Adani Wilmar Worth Buying Now?

Adani Wilmar Worth Buying

Despite a muted debut on 8th February 2022 due to weak global cues, Adani Wilmar share prices have surged continuously to hit a new high of Rs. 419.90 recently.

The record gains for Adani Wilmar share prices has catapulted the stock to the big league of top 100 listed companies with a market cap of around Rs. 50000 crores. The market capitalization of Adani Wilmar now stands higher than companies like Tata Elxsi, ABB India, Page Industries, Biocon, Bosch etc.

Seven companies of the Adani Group are currently listed on the stock markets. Of these except for Adani Power, all other companies such as Adani Enterprises (Rs 1.96 tn), Adani Total Gas (Rs 1.96 tn), Adani Green Energy (Rs 3 tn), Adani Transmission (Rs 2.18 tn) and Adani Ports and Special Economic Zone (Rs 1.50 tn) have a market cap in excess of Rs 1 tn each.

Adani Wilmar reports strong Q3 numbers

0n 14th February, Adani Wilmar reported a 66% year-on-year growth in consolidated net profit to Rs 211.4 crore for the third quarter ended December. On a year-on-year basis for the reported quarter, the company’s consolidated revenues also grew 40.6% to Rs 14,378.7 crore.

In a statement issued by the company, Adani Wilmar’s MD & CEO said “We have been able to continue our business performance in line with what we have been able to showcase in the recent past”.

The record growth in company’s topline performance can be attributed to 40 percent year-on-year growth in Adani Wilmar’s edible oil business riding on strong volumes and 46% increase in the company’s FMCG segment.

In the third quarter the company commissioned an additional Oleochemical plant with a capacity of 400 tons per day at Mundra in Gujarat, which resulted in doubling of its total capacity to 800 tpd. The company’s Mundra plant is the largest domestic single location Oleochemical plant.

Besides this, the company also commenced operations of a gram flour plant in Nagpur with capacity of and a 50 tpd soya nuggets plant in Haldia with a capacity of 150 tpd. To grow its massive footprint across the South-East Asian region, the company acquired Bangladesh Edible Oil Limited (BEOL), by taking 100 per cent stake in Adani Wilmar Pte Ltd (AWPTE), the former’s holding company.

With this, many investors are asking the same question:

Is Adani Wilmar worth buying at current levels?

While a possibility of correction in the near term cannot be ruled out given the unprecedented surge in Adani Wilmar share prices, the long term prospects for the stock appear bright given its strong fundamentals and backing of its parent group.

Another reason for this meteoric rise in Adani Wilmar’s share prices could be its reasonable valuation (PE of 37.56x) compared to peers in the FMCG industry such Britannia (54.7x) and Nestle (81.6x).

With its diversified product offerings in the FMCG category, strong brand recall value and well-established distribution network across the country the company is a leading player in branded edible oil and packaged food business. The company offers a wide range of FMCG goods such as edible oil, wheat flour, rice, pulses, and sugar. Besides this Adani Wilmar is also the largest domestic basic oleochemical manufacturer and backed by an experienced and professional management team.

In its Red Herring Prospectus, the company had mentioned that one of the objectives of the IPO was repayment of debt. Once the debt is repaid, the company will become debt-free.

Incorporated in the year 1999 Adani Wilmar is a 50:50 joint venture between the Adani Group, a multinational conglomerate with business interests across diversified sectors such as transport, logistics, utility and energy and Singapore’s Wilmar Group, a leading agribusiness group in Asia. The joint venture enjoys immense benefit from Adani Group’s strong understanding of local markets, wide experience in domestic trading and well-established domestic logistics network as well as Wilmar Group’s global sourcing capabilities and technical expertise.

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– Written and contributed by Pradeep Sukumaran.

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