KR Choksey in its recent report on Adani Wilmar Limited upgrades its target price with an accumulated rating. The brokerage estimates a target price of Rs 751 apiece. KR Choksey says the company has Strong volume growth across segments; margins remained stable. In Q1FY23, the company reported revenue growth of 30.2% YoY and Volume grew by 15% YoY, respectively. The company registered growth across segments. Growth has been driven by the company’s focus on increasing penetration in the semi-urban and rural markets. According to the brokerage’s estimated target price, if you buy the stocks of the company at the current market price, you could witness potential gains of around 12%.
Stock Outlook & Returns
On Friday, 05 August, the share of the company closed at Rs 674.50 apiece after a falling 2.64% from the previous close. It is currently trading Rs 447.50 above the 52 week low level and Rs 203.5 below the 52 week high level, respectively. Last week, the shares of the company moved up by 2.38%.
In the past 1 month, the shares price gained nearly 15.88% and fallen roughly 0.84% in the past 3 months, respectively. It was listed on 08 February 2022 on the stock exchange and since then it has delivered a positive return of 151.44%.
The 52-week low of the stock record on 08 February 2022 is Rs 227 apiece, and the 52-week high recorded on 28 April 2022 is Rs 878 apiece.
The ROE of the stock is 10.95%. TTM PE ratio is 108.09 and PB ratio is 11.88. TTM EPS is Rs 6.24. It has a market capitalization of Rs 87,663 crore.
Growth momentum continues with market share gain
Adani Wilmar reported revenue growth of 30.2% YoY/-1.5% QoQ to INR 1,47,316 Mn in Q1FY23. Consolidated volume stood at 1.19 MMT in Q1FY23 as compared to 1.03 MMT in Q1FY22, registering a growth of 15%. Edible Oil registered a growth of 23% YoY to INR 1,15,19o Mn with volumes grew by 6% YoY. Food and FMCG registered a growth of 66% YoY with volumes grew by 53%. Industrial Essentials volume up by 22% whereas revenues registered a growth of 67%. AWL’s focus on Food and FMCG is yielding results as the volume share has gone up to 16% in Q1FY23 from 12% in Q1FY22. EBITDA for the quarter stood at INR 4,431 Mn, registering a growth of 17.4% YoY/4.1% QoQ. Net Profit for the quarter came at INR 1,936 Mn against INR 1,757 Mn in Q1FY22, growth of 10.2% YoY. During the quarter, the company has seen a double-digit growth in sales through e-commerce and modern trade. Ecommerce registered a growth of 23% YoY while Modern trade grew by 21% YoY.
Increasing penetration resulted in market share gain
Adani Wilmar’s focus on penetration-led growth resulted in market share gains across segment. The company continues to be market leader in Edible Oil with market share of 18.7% on standalone basis while on consolidated basis (including market share of JV KTV Foods) it is 19.7%. Fortune Atta continues to gain market share and reached to 4.9% in Q1FY23 as against 3.8% in Q1FY22. In Basmati rice the consolidated market share improved to 10.6%. AWL continues to improve its reach with direct distributors count improved by 6% YoY to 5,732 and sub distributorship improved by 166% to 2,142. Total town under coverage improved to 6,685 in Q1FY23 from 4,994 in Q1FY22. The company continues to improve its digital presence with its D2C presence increased to 25 cities and 3.6+ lakh app downloads. Average order value increased to INR 1,000 from INR 859 in Q4FY22.
KR Choksey Recommends Buy For A Target Price of Rs 751
According to the brokerage firm Adani Wilmar has shown strong growth in both volume and value terms across categories with market share gains in Edible oil, Atta and Rice. Despite increase in input costs the company has been able to maintain its margins. Adani Wilmar’s focus on penetration led growth with increasing its reach is yielding results for the company.
The Broekrage said, “We like company’s strategy of penetration led growth, increasing distribution reach, timely capacity addition to support the growth, new product launches and acquisition of Kohoinoor brand. We expect Adani Wilmar to sustain its growth momentum along with improvement in margins with inflationary pressure easing. We continue with “ACCUMULATE” rating on the stock with target price of INR 751 (earlier 734) per share, giving 11.5% upside from current levels.”
The stock has been picked from the brokerage report of KR Choksey. Greynium Information Technologies, the Author, and the respective Brokerage House are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to check with certified experts before taking any investment decision.