Adani Wilmar IPO: Ventura Securities sees over 100% upside in 24 months

While initiating the coverage of Adani Wilmar, Ventura Securities advised investors to 'Subscribe' to the initial public offering (IPO) for the long term with an upside of 103.8 per cent against the upper price band of Rs 230. The brokerage believes that the scrip may hit Rs 468.80 in the next 24 months.

The public offer will open for subscription on January 27. The company has fixed a price band of Rs 218-230 per share for the upcoming IPO, which will close on January 31.

Incorporated in 1999, the company is a joint venture between Adani Enterprises and the global Wilmar Group catering to essential kitchen commodity requirements of Indian consumers. Apart from food products like edible oil, wheat flour, rice, pulses, and sugar, the company also offers a diverse range of industry essentials (including oleochemicals, castor oil and its derivatives) and de-oiled cakes. Adani Wilmar's flagship brand, "Fortune", is the largest selling edible oil brand in India.

It has 22 manufacturing facilities, comprising 10 crushing units and 18 refineries, located across 10 states in India. The Mundra refinery, with a capacity of 5,000 million tonnes per day, is the country's largest single-location refinery.

During the period 2014-15 to 2019-20, Adani Wilmar was among the top five fastest-growing packaged food companies in India by revenue. "Over FY21-24, we expect the company to grow its revenue at a robust CAGR of 16.7 per cent to Rs 58,959 crore spearheaded by the FMCG vertical which is set to grow at a CAGR 31.5 per cent to reach Rs 4,338 crore," Ventura Securities said.

It further added that the FMCG revenue share is expected to climb to around 7.4 per cent (around 220 bps) by FY24 leading to EBITDA and profit after tax (PAT) growth of 23.4 per cent and 19.9 per cent to Rs 2,491 crore and Rs 1,253 crore, respectively, by FY24. EBITDA and PAT margins too are set to expand to 4.2 per cent (up 70 bps) and 2.1 per cent (up 20 bps), respectively, by FY24.

According to IPO watch, shares of Adani Wilmar are available at a premium of Rs 70 in the unlisted market.

Also read: Adani Wilmar IPO: Company looking at Rs 30,000 cr valuation on listing