Shares of Adani Wilmar rise. What action should investors take following Q3 results?
In early Thursday trades on the BSE, shares of edible oil giant Adani Wilmar Ltd (AWL) rose more than 5% to 440 rupees per share after the company reported a 16% increase in its consolidated profit to 246 crore for the third quarter ended December 2022 as compared to 211 crore in the same period last year. Adani Wilmar is a 50:50 joint venture (JV) between business conglomerate Adani Group and food processing company Wilmar International, based in Singapore. Adani Wilmar sells its cooking oils and some other food products under the Fortune brand.
Adani Wilmar (AWL) produced a strong set of statistics, with sales up 7.4% YoY and in line, and EBITDA/PAT up 20%/16.4% YoY, far ahead of our projections.
Despite operating in a highly competitive industry (edible oils and foods/FMCG), Adani Wilmar has continuously produced excellent volume growth across all categories, according to the note. The brokerage continued, "We are decreasing our FY23E, FY24E, and FY25E by 8.2%, 5%, and 4.4%, respectively, with a roll over to FY25E, producing a reduced SoTP-based target price of $680 (formerly $708); we are maintaining our "BUY/SN" rating on Adani Wilmar shares.
According to Edelweiss, the fact that the food and FMCG businesses are now making up 15%/7% of the company's volumes/value and have shown a 26% YoY volume growth in Q3FY23 is encouraging because Adani Wilmar's aim is to establish itself as a foods business.
In terms of volume, the third quarter saw an annual gain of 16% for Adani Wilmar, according to MD and CEO Angshu Mallick.
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