Adani Wilmar's revenue declined 12 per cent YoY was on account of steep decline in edible oil prices, leading to high priced inventory. 
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Adani Wilmar's revenue declined 12 per cent YoY was on account of steep decline in edible oil prices, leading to high priced inventory. Nuvama Institutional Equities has reduced its target price on Adani Wilmar to Rs 600 from Rs 625 earlier while retaining its 'Buy' rating on the stock, saying slippage in edible oil prices results in weak June quarter performance. The brokerage said revenue and Ebitda were below its estimates. Nuvama said Adani Wilmar continued to gain market share in the edible oil and wheat flour but lost market share in rice. It cut FY24 and FY25 earnings per share estimates for Adani Wilmar by 8.1-8.5 per cent.
What it liked in Adani Wilmar's Q1 results was the fact that Food and FMCG segment continued its strong growth trajectory, with volume growth of 21 per cent and value growth of 28 per cent YoY.
"Oil and foods recorded around 50 per cent YoY volume growth in the alternate channels. The sale of branded products to HORECA clients continued to grow strongly with expansion of its distribution network in more cities and acquisition of new client accounts. Both urban and rural areas have witnessed strong demand and direct reach now stands more than 0.6 million outlets (2x of FY20) with a coverage of 21,700+ towns," Nuvama said.
Nuvama said Adani Wilmar continued to gain market share YoY and was at top in edible oil (market share 1.5 times of the next competitor with 27 per cent YoY volume growth) and at second position in wheat flour with 5 per cent share.
"To seize the opportunity of gaining share from regional brands in the under-indexed customer segments Adani Wilmar is investing in the value-added blended oils. It launched premium wheat flour under ‘Fortune’ brand and a multi-purpose cleaner under ‘Ozel’ brand in Q1FY24," i said.
Meanwhile what Nuvama did not like in the June quarter results was the fact that Adani Wilmar's revenue declined 12 per cent YoY was on account of steep decline in edible oil prices, leading to high priced inventory.
Gross margin and Ebitda margins declined 102 bps YoY and 200 bps YoY, respectively. Apart from this, impact on profitability was due to hedges disalignment, continuance of TRQ disparity, increased finance cost (up 14 per cent YoY) and loss of Rs 21 crore in Bangladesh subsidiary, Nuvama said.
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