Nuvama Institutional Equities has retained its 'Buy' rating on Adani Wilmar Ltd with a 12-month target price of Rs 424 on the stock, suggesting a 65 per cent potential upside over the prevailing share price. The stock is down 22 per cent in 2025 so far.
The domestic brokerage said Adani Wilmar is building up the value-added portfolio, which will expand by over 80 products across categories, following the acquisition of Tops brand (GD Foods).
Adani Wilmar has a pan-India presence, particularly in North India and post the acquisition, the company will be able to further leverage its distribution capabilities and scale up operations, Nuvama said.
GD Foods posted FY24 revenue of Rs 386 crore and Ebitda of Rs 32 crore. The company reported gross margin of 48 per cent and Ebitda margin of 8 per cent.
"This acquisition would significantly enhance Adani Wilmar's margin-accretive product portfolio, adding 0.7 per cent to overall sales. Adani Wilmar's foods segment constitutes 10 per cent of the total business and post-acquisition Tops' salience in the food category shall be 6.6 per cent," it said.
The acquisition would be executed in multiple tranches, with 80 per cent of the shares to be acquired in the first tranche, and the balance 20 per cent over the next three years. The first tranche is likely to be closed within 60 days from execution date of share purchase agreement (SPA).
Adani Wilmar plans to fund this acquisition via internal accruals or IPO proceeds. "AWL shall acquire 80 per cent in the first tranche at EV of Rs 600 crore and EV/sales of 1.6 times, which in our view is reasonable," Nuvama said.
Adani Wilmar reported its best-ever quarter in Q3FY25 with revenue growth of 31 per cent YoY, Ebitda growth of 57 per cent YoY and PAT growth of 105 per cent YoY. "We remain positive on the stock; maintain ‘BUY’ with a target price of Rs 424," Nuvama said.
Meanwhile, CCI approval for Adani's exit from Adani Wilmar's agri business is still pending, with approval anticipated in coming months. The deadline for Adani's exit from Adani Wilmar's agri business has been set for December 2025. Once CCI approval is received, the exit process is likely to begin, Nuvama said.