Adani Wilmar shares fall over 8% in two sessions, here's why

Shares of Adani Wilmar fell for the second consecutive session today after rating agency CreditSights raised several concerns with regard to the conglomerate's business. Adani Wilmar stock lost 3.86 per cent intraday to Rs 663 today against the previous close of Rs 689.60 on BSE. Adani Wilmar shares closed 4.73 per cent lower on Tuesday against the previous close of Rs 723.85.

Adani Wilmar stock is trading higher than the 50-day, 100-day and 200-day moving averages but lower than 5-day and 20-day moving averages. A total of 2.49 lakh shares of the firm changed hands amounting to a turnover of Rs 16.71 crore on BSE. Market cap of the firm fell to Rs 87,338 crore on BSE.

Adani Wilmar shares hit a high of Rs 878.35 on April 28, 2022. Considering the current market price, the stock has lost 24.57 per cent till date from record high.

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 CreditSights said, "Its strong competition with Mukesh Ambani-helmed Reliance Industries could push Adani Group to make some imprudent financial decisions."

The rating agency stated, "As the two mega conglomerates in the Indian corporate sector compete for market share in a few new economy businesses (e.g., renewable power, telecom), it could lead to some imprudent financial decisions from both sides, such as higher capex spends, aggressive bidding, and overleveraging. On the whole, RIL has been on a deleveraging trend over the past few years, and boasts robust credit metrics (gross and net leverage at 2.6x and 2.2x as at end-FY22) and interest cover (7.8x at FY22)," further adding that Adani has elevated leverage and poor interest cover and cash outflows in almost all its entities and is at greater financial risk.

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Currently, Adani Wilmar stock is trading 200 per cent higher than its market listing price. The stock made a muted market debut on February 8. Shares of Adani Wilmar listed at Rs 221, a 3.91 per cent discount to their IPO issue price on BSE. The issue price of the IPO stood at Rs 230. The firm offered its shares in a price band of Rs 218-Rs 230.

On May 2, the edible oil major logged a 10 per cent rise in consolidated net profit at Rs 193.59 crore for the quarter ended June on higher sales. Net profit stood at Rs 175.70 crore in the year-ago period. Total income climbed to Rs 14,783.92 crore in the first quarter from Rs 11,369.41 crore in the corresponding period of the previous year.

Adani Wilmar is a joint venture between the Adani Group and Wilmar Group of Singapore. It is engaged in the manufacturing of edible oil, wheat flour, rice, pulses, and sugar. The company also owns the popular brand Fortune, which is the largest selling edible oil brand in India.

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