Stock Jumps After Listing at Discount; Buy, Sell or Hold?


Adani Wilmar Listing on BSE, NSE Today:  Adani Wilmar, one of the largest Fast-Moving Consumer Goods (FMCG) companies in India on Tuesday started its trading journey amid a volatile market. On BSE, Adani Wilmar share was listed at Rs 221, over the issue price of Rs 230 per share. However, the Adani Wilmar stock jumped to Rs 244, right after the debut on the BSE. On NSE, Adani Wilmar share started at Rs 227 apiece.  Adani Wilmar share, then rose to Rs 245 on NSE, after listing.

Adani Wilmar initial public offering (IPO) opened for subscription from January 27 to January 31. The price band for Adani Wilmar IPO was fixed at Rs 218-230 apiece. Adani Wilmar IPO comprises a fresh issue of new equity shares for an amount of up to Rs 3,600 crore.

Adani Wilmar IPO Listing: What Investors Should Do Now

For investors, Santosh Meena, head of research, Swastika Investmart Ltd, said, “Adani Wilmar is debuting the secondary market with a minor loss against the expectation of listing gain of 10-15 per cent. Tepid listing of Adani Wilmar can be attributed to weak market sentiments otherwise fundamental and valuations were good for this IPO. Those who applied for listing gain can maintain a stop loss of 200 while long-term investors should hold it. New investors can also look at buying opportunities at initial weakness.”

Ravi Singhal, vice chairman at GCL Securities said, “Those who want to buy Adani Wilmar shares are advised to buy this stock in Rs 220 to ₹240 per share range for one year target of Rs 300 to Rs 320 maintaining strict stop loss at Rs 190 apiece levels.”

Strong brand presence in the edible oil industry and packaged food industry, diversified portfolio and millions of customers have helped the Adani Wilmar to garner a strong response from the investors.

Adani Wilmar IPO Subscription

Adani Wilmar IPO received decent response from the market during the subscription period. Adani Wilmar IPO was subscribed 17.37 times during the three-day. The portion set aside for qualified institutional buyers (QIBs) received 5.73 times subscription. Non-institutional investors put bids worth 56.30 times. Retail investors subscribed Adani Wilmar IPO 3.92 times. The overwhelming response from the non-institutional investors also predicted a decent listing for

Adani Wilmar share on February 8.

Adani Wilmar IPO Valuation

On the valuation of Adani Wilmar IPO, Amarjeet Maurya, AVP – mid caps, Angel One Ltd said, “In terms of valuations, the post-issue TTM P/E works out to 37.7x (at the upper end of the issue price band), which is reasonable considering AWL’s historical top-line & bottom-line CAGR of 13 per cent and 39 per cent respectively over FY19-21. Further, Adani Wilmar has strong brand recall, wide distribution, better financial track record and healthy ROE. Considering all the positive factors, we believe this valuation is at reasonable levels.”

Adani Wilmar Company Overview

Adani Wilmar is a joint venture between Adani Enterprises and Wilmar International, which offers most of the essential kitchen commodities for Indian consumers, including edible oil, wheat flour, rice, pulses, and sugar. The company’s business is categorized into a) edible oil (82 per cent of revenue), b) packaged food and FMCG (5 per cent), c) industry essentials (13 per cent). Its ‘Fortune’ flagship brand is the largest-selling edible oil brand in India. Rural population contributes to 30-35 per cent of the edible oil share.

Adani Wilmar Financials

On financials, Reliance Securities explained in a note, “Adani Wilmar has been mostly resilient to the fallouts from the Covid-“19 pandemic. Despite a dip in the EBITDA margin from 4.4 per cent in FY20 to 3.6 per cent in FY21, the company reported a 62 per cent year-on-year jump in PAT at Rs 6.6 billion, led by the saving in interest cost, which also helped to improve the net margin to 1.8 per cent in FY21, from 1.4 per cent in FY20. Debt-to-equity improved from 0.9x in FY20 to 0.6x in FY21. For 1HFY22, its revenue jumped by 54 per cent year-on-year to Rs 248 billion, with an EBITDA of Rs 8 billion (up 23 per cent year-on-year) and PAT of Rs 3.3 billion (up 36 per cent year-on-year).”

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