Adani Wilmar reported a good set of December quarter results. Nuwama Institutional Equities said the food and FMCG business is now contributing 15 per cent by volume and 7 per cent by value, which is a positive sign, as Adani Group company’s strategy to focus on positioning itself as a food business. What brokerages didn’t like was the 8 per cent drop in earnings per tonne. The domestic brokerage has cut its target target on the stock to Rs 680 from earlier Rs 708, which still indicates a potential upside of 62 per cent from Wednesday’s closing price.
On Thursday, the stock gained 5 per cent to hit an all-time high of Rs 440.30.
Nuwama said the company’s wheat flour and rice offerings are growing well on the back of enhanced distribution reach and new product launches. Adani Wilmar continued to gain market share in edible oil, the major revenue contributor, with volume growth of 9 per cent despite weak demand from the baking and frying industry. Alternative distribution channels (other than GT) have registered strong volume growth of 32 per cent year-on-year.
“Rise in benchmark rates drove up interest cost for the quarter and is expected to remain more or less the same. Bangladesh operations reported losses in the third quarter due to adverse forex impact and price cap on edible oil by the government. Additional 20 per cent Tariffs on rice caused a slowdown in rice exports,” Nuwama said.
Nuwama said Adani Wilmar competes in a highly competitive business (edible oils and foodstuff/FMCG), but has consistently posted strong volume growth across all segments. The brokerage cuts its FY23E-FY25 with a rollover to FY25E by 4.4-8.2 per cent, with a target price of Rs 680.
Adani Wilmar on Wednesday reported a 16 per cent year-on-year (YoY) rise in consolidated net profit at Rs 246 crore for the December quarter, as against Rs 211 crore in the corresponding quarter last year. Revenue for the quarter grew by 7 percent to Rs 15,438 crore as compared to Rs 14,371 crore in the same quarter last year. The Adani Group company said volumes for the quarter grew by 16 per cent, owing to huge opportunities available in the packaged food industry.