Adani Wilmar has provided investors with returns of 155% so far this year; should you book a profit

Adani Wilmar has provided investors with returns of 155% so far this year; should you book a profit

Adani Wilmar Shares Today: Adani Wilmar’s June earnings were generally in line with analysts’ expectations despite macro headwinds. The stock, however, dropped more than 2% on Thursday after the world’s largest producer of edible oils announced a 10% increase in consolidated net profit at Rs 194 crore for the quarter ended in June as the company’s sales and volumes rose. As volumes jumped 15% year over year to 1.19 million metric tonnes, Adani Wilmar’s operating revenue increased 30% to Rs 14,731.62 crore during the quarter. This year, thus far, The price of Adani Wilmar stock has increased by almost 155%, and analysts anticipate more gains since, in their opinion, the Adani Group company’s rising margin profile and volume growth bode well for the future. Shares of Adani Wilmar were trading at Rs 681 on the NSE, down 2.5% from the previous close.

The Managing Director and CEO of Adani Wilmar Limited, Angshu Mallick, stated after the Q1 earnings that Adani Wilmar has “continued to display a steady growth on total volumes, spearheaded by an extraordinary development in the foods industry.” This is despite several challenges that we encountered throughout the quarter, with inflation and weak consumer demand being the main causes of concern. Our expansion has been fueled by a GTM strategy that prioritizes greater penetration in rural and semi-urban areas. We can expand our food business more quickly because of this improved penetration.

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However, it’s possible that the stock ran out of steam too quickly, and several brokerages that cover the market do not expect much from the 2022 debutant.

While there was a slight drop in the price of edible oil (partly due to government actions as well), the trajectory remained unstable. The holiday season and some anticipated increases in rural demand (good monsoon-led) should help with the demand outlook. Strong competitive advantages in the edible oil industry provide Adani Wilmar an advantage over the competition, according to the ICICI Securities paper. These advantages include price laddering, oil segments, scale, and market intelligence (provided by Wilmar).

Additionally, according to the brokerage, Adani Wilmar benefits from numerous synergies across all three business segments, which bodes well for the expansion of the packaged food business. These synergies include a scale in procurement and logistics, brand recall of “Fortune,” easily accessible distribution, and mix-load supply chain advantages from edible oil.

Given that Adani Wilmar has a primary concentration in that sector, ICICI Securities is intrigued by the potential in the HoReCa sector. “We support the company and have a positive outlook. We raise our target price for Adani Wilmar shares to Rs 595 (from Rs 550) and decrease (from hold) our recommendation for the stock in light of its recent 20% gain, and the statement continued.

According to Edelweiss, Adani Wilmar’s YoY revenue growth was 9.7% higher than expected, and the business is still gaining market share in the sectors of edible oil, wheat, and rice.

Positively, segment growth that was driven by volume helped the profit profile. The brokerage reported that despite inflationary headwinds, edible oil volumes increased by 6% YoY. It also pointed out that food now accounts for 16% of total volume, up from 12% YoY.

Relaunches of Kohinoor brands for HoReCa (hotels, restaurants, and catering) in June and consumer brands in August, according to Edelweiss, would promote premiumization.

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