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Adani wilmar IPO, Should you hold or sell Adani wilmar

Adani wilmar buy, sell or hold after IPO listing

The IPO of Adani Wilmar Company was on the radar of investors in the Indian market for a long time, but when Adani Wilmar IPO came in the Indian market, it got mixed response from the investors. Adani Wilmar's IPO was subscribed 17.37 times. Nevertheless, it can be considered an average response from the investor’s side. Portion of retail investors was subscribed 3.92 times. Let us now understand what you should do in the stock after the listing of Adani Wilmar's IPO. Should you hold Adani Wilmar? Before this let us understand the business model of the company.



Question:

What business does Adani Wilmar Company do?

Answer:

Let us tell you that Adani Wilmar was incorporated in 1999 & It was a joint venture with Singapore based business group wilmar. Since then Adani Wilmar Company has established itself as a food company in the FMCG sector. Adani Wilmar Company is offering most of the essential kitchen commodities, including edible oil, flour, rice, pulses and sugar. In FY 2021, Company had generated approximately 73% of their revenues from edible oil, food and FMCG sales. Fortune oil is one of its famous brand name in Indian market.

Question:

What are the Positive points about the Adani Wilmar?

Answer:

  • Company management has main focus on reducing the debit of the company. Company had raised nearly 3600crore through its IPO out of which 1100crore is expected to use for reducing the debit of the company. It will help the company to reduce its finance cost. Adani wilmar company has total debit on its books is nearly 2100crore & if company will reduce its debit then it will be very good sign for the company shareholders & investors.
  • As per company management If company will use 1100crore for repayment of the loan then It will help the company to become virtually debit free. Also company will be able to do interest saving nearly 80crore & it will directly add into the company profit.
  • Adani wilmar has strong grip on edible oil segment. Demand for its “Future” oil is not limited to only urban areas of India but also it has strong presence into the rural areas of India. People are becoming more brand conscious. Youngsters like branded food & hygienic food.
  • Adani wilmar has also famous brands like Adani flour, Adani rice, sugar etc Youngsters like to buy branded products.
  • Wilmar is not only number one in the world for Palm oil but also they have largest rice mills in the world. Also second largest in wheat flour miller in the world.
  • With the face value of 1rs each company had come up with 218rs to 230rs IPO price band. It seems that management has left some juice for the investors after its IPO listing.
  • There is no OFs component was involved in the IPO. It was a biggest relief for the IPO investors . It means that Company will use 1900crore for CAPAX or we can say that for company will use such amount for business expansion as well as reducing of debit. Also company will use  450 crore for strategic investment .
  • More than 5500 distributors are in India. Company promoters are holding 100% stake in the company pre IPO but post IPO it will reduce by 12% and will reached at 88%.

Question:

What are the negative points about the Adani Wilmar Company?

Answer:

As of now We are not getting much negative points about Adani wilmar but yes we can say that Company has more dependency on the raw material which company do import from other countries therefore In term costing company has some risk but still its joint venture company i.e wilmar give support to Adani ltd because nearly 30% raw material does import with the help of Wilmar group.

       Question:

What is the financial performance of Adani wilmar?

Answer:

Total Revenues:

Adani wilmar revenues have been increasing in the last 4 financial years. In FY 19 total revenues were 28797 cores, In FY 20 total revenues were29657 crore. We had seen good jump in FY 21 revenues and in FY 21 total revenues were nearly 37090 crore. 34875. As per company financial report of FY22 (6 months) revenues are 24875 crore.

Net Profit:

In FY 19 net profit of Adani wilmar was 375 crore, In FY 20 net profit was 460 crore, In FY 21 net profit was 727 crore & in the mid of FY 22 net profit is 357 crore.

Peers Comparison of Adani Wilmar:

Marico:  Sales in FY 21 8048 crore, Market Cap 60,400 crore

Tata consumers:  Sales in FY21 11, 602 crore, Market cap 65,000 crore

Adani Wilmar: Sales in FY 21, 37090 crore, Market Cap 30,000 crore

  Question:

Should you hold or sell Adani Wilmar stock?

Answer:

As we have discussed lot of positive points about the Adani wilmar company but still many positive points yet to discuss. Company management has more focus on transformation of business. If we will check past business track record of the Adani Wilmar company then in 1999 company had started its business of Edible only but from last few years company management have been more focusing into different food markets and food products like Rice, flour, sugar etc. Due to this transformation into the business Revenues of the company has also increased by 14% in the last 3 to 4 years. EBITA of company has also grown by 7%. If we will talk about ROE then it’s nearly 22%. These all positive steps of the company management is compelling me to say that Long term investors should hold Adani wilmar Stock even after its IPO listing. Long term investors should not worry about this company.

Question:

Should you buy or sell Adani Wilmar?

Answer:

If you want to invest into the Adani Wilmar for the long term point of view then It is stock to keep into your portfolio for long term investment point of view. Even Long term investors can buy Adani wilmar after its IPO listing. Keep into your mind that Adani wilmar stock is going to be investors friendly stock.

Question:

Should you sell Adani wilmar stock after IPO listing?

Answer:

 If you are a trader then it is better to book some profit after IPO listing of Adani wilmar.

Question:

What is the long term target of Adani wilmar?

Answer:

Long term target of Adani wilmar is 280rs to 320rs+ in the 1 to 2 years time frame.

Recommendation on Adani Wilmar stock:

As per our research Adani wilmar is going to be portfolio stock for long term point of view. In the short term we may see some profit booking on higher levels but try to use dip as a buying opportunity.

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