Adani Wilmar shares surge. What should investors do post Q3 results?

“Adani Wilmar (AWL) posted a good set of numbers with EBITDA/PAT up 20%/16.4% YoY – well ahead of our estimates; revenue was up 7.4% YoY and in line with our estimates. Overall volumes grew by 16% YoY driven by Food and FMCG/industry essentials, thereby continuing to diversify its revenue base. Gross/EBITDA margins expanded by 140 bp/42 bp YoY and 160 bp/213 bp QoQ. Strong demand on the back of festivities and weddings, gradual recovery in rural markets and a bumper kharif crop acted as tailwinds in Q3FY23,” said domestic brokerage and research firm Edelweiss.

Although, Adani Wilmar competes in an extremely competitive business (edible oil and foods/FMCG), it has consistently delivered strong volume growth across segments, the note stated. “We are cutting our FY23E/FY24E/FY25E by 8.2%/5%/4.4% with a roll over to FY25E yielding a revised SoTP-based target price of ₹680 (earlier ₹708); retain ‘BUY/SN’ on Adani Wilmar shares,” the brokerage added.

Food and FMCG business is now contributing 15%/7% volumes/value to the business and has clocked in 26% YoY volume growth in Q3FY23, which as per Edelweiss is a positive sign as Adani Wilmar’s strategy is to focus on positioning itself as a foods business.

Adani Wilmar MD and CEO Angshu Mallick said that the firm recorded an annual growth of 16% in volume terms during the third quarter and witnessed a strong demand on the back of festivities and weddings, gradual recovery in rural markets and a bumper kharif crop.

The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.