COMPANIES

No Data Found

NEWS

No Data Found
Advertisement
Adani Wilmar shares Q3 update; consolidated profit may fall 80%, retain 'Buy', says Nuvama

Adani Wilmar shares Q3 update; consolidated profit may fall 80%, retain 'Buy', says Nuvama

Adani Wilmar: Nuvama called the Q3 update a mixed performance and expects Adani Wilmar to log a 13 per cent fall in consolidated revenue, 56 per cent drop in consolidated Ebitda and 80 per cent YoY plunge in consolidated profit.

Amit Mudgill
Amit Mudgill
  • Updated Jan 8, 2024 9:01 AM IST
Adani Wilmar shares Q3 update; consolidated profit may fall 80%, retain 'Buy', says NuvamaAdani Wilmar share price today: Adani Wilmar shares have fallen 6 per cent in the last six months and 35 per cent in the last one year. Nuvama retained its ‘BUY’ on Adani Wilmar with a target price of Rs 515 on the stock.

Adani Wilmar Ltd will be in focus on Monday morning after the Adani group joint venture said its standalone sales fell 15 per cent year-on-year (YoY) in the December quarter, despite a 6 per cent rise in volumes. Edible oil volume was flat for the quarter, but sales in value terms declined 21 per cent YoY. The FMCG major said its Food & FMCG segment reported 28 per cent surge in revenue amid an 18 per cent YoY rise in volumes. The industry essentials segment recorded a 15 per cent jump in volumes but a flattish sales in the December quarter, the Adani firm said in a BSE filing.

Advertisement

Brokerage Nuvama called the Q3 update a mixed performance and expects Adani Wilmar to log a 13 per cent fall in consolidated revenue, 56 per cent drop in consolidated Ebitda and 80 per cent YoY plunge in consolidated profit for the quarter.

"We anticipate the edible oils business to contract 21 per cent YoY in value terms due to price cuts in edible oil given softer RM costs. Food and FMCG business is likely to grow 28 per cent (aided by Kohinoor) while industry essentials may stay flat YoY. Ebitda margins are likely to decline 193 bps YoY but shall expand 80 bps QoQ. Although Adani Wilmar has been doing well over the years in terms of market share in all categories, there is a near-term risk from local players given commodity deflation in edible oils," Nuvama said.

Advertisement

Also read: Adani Wilmar shares in focus as promoter entities look to sell 1.24% stake

Adani Wilmar shares have fallen 6 per cent in the last six months and 35 per cent in the last one year.  Nuvama said Adani Wilmar will keep using regional approaches to push deep penetration while adding that price cuts in edible oil stay a concern. It retained its ‘BUY’ with a target price of Rs 515 on the stock.

Adani Wilmar said it continued to grow well during the quarter, driven by increasing penetration of packaged oil and food. In the branded oil and foods, Adani Wilmar benefited from the elevated demand from the festive and wedding season and recorded the best-ever volumes during the quarter, growing over a strong base quarter.

Advertisement

Rural sales, it said, were also robust with continued demand for branded staples.

"During the quarter, the company recorded overall volume growth of 6 per cent, however, lower pricing of edible oils in line with the fall in the cost of raw materials (crude edible oils), resulted in a revenue decline of 15 per cent YoY. In both Oil and Foods, branded products account for around 80 per cent of the business and have been growing at a faster rate. With the easing of the global edible oil prices, our branded edible oils volume growth has been strong during the year, with 4% YoY growth during the quarter and 16 per cent YoY growth in 9M FY’24," Adani Wilmar said.

In the case of edible oils segment, volume stayed flat YoY in Q3FY24 due to subdued demand from institutional clients and registered a growth of 9 per  YoY in 9MFY24. In the Food & FMCG segment, revenue from branded products in the domestic market has been growing at 40 per cent YoY or higher for the last nine quarters.

"On the export front, the food business has been impacted by the restrictions on exports for the last three quarters, yet strong domestic sales have led to 28 per cent YoY revenue growth for the overall Food & FMCG segment in both Q3 as well as YTD. The company has a unified system across processes as a pan-India player, however at customer-end, the company is progressively using more regional approaches to drive deeper penetration in the local markets," Adani Wilmar said.

Advertisement

As the food business is scaling-up and has built a steady consumer demand, Adani Wilmar said it is enabling the company to better leverage its edible oil distributors. Adani Wilmar said it is also focused on improving the sales capabilities of its general trade distribution system.

"In a customer centric approach, our salesmen can now sell the entire range of our products to the retail outlets, with sales function using customized approaches for different categories of outlets. With the large headroom available for distribution expansion, the focus stayed on increasing our network, particularly in rural towns and southern states, ensuring a deeper penetration in existing towns and higher throughput from penetrated outlets," it said.

Adani Wilmar said it is on track to more than double its rural town coverage during the financial year from 13,000 towns to 30,000-plus rural towns by the end of this financial year.

 

Also read: Stock recommendations by market analysts for January 8, 2024: Jindal Saw, CDSL and REC

Disclaimer: Business Today provides stock market news for informational purposes only and should not be construed as investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.
Published on: Jan 8, 2024 8:32 AM IST
Post a comment0