In this article
- IPO details
- Offer break-up
- IPO Object
- IPO Strengths
- Key Risks
- Adani Wilmar Limited Company Finance
- Should you invest in the IPO?
Established in 1999, Adani Wilmar is a 50:50 joint venture company between Gautam Adani-led conglomerate Adani Group and Singapore’s Wilmar group, selling cooking oils under the Fortune brand. Apart from cooking oils, it sells food products like rice, wheat flour, and sugar. It also sells non-food products like soap, handwash, and sanitizers.
The company has 22 plants situated across 10 states in India, containing 10 crushing units and 19 refineries. The organization’s processing plant in Mundra is one of the biggest single-area refineries facilities in India with a limit of 5,000 MT per day.
In terms of revenues, almost 35% of sales of the company come from rural areas, while 65% of the volumes are from urban areas. 35% of staple product sales come from rural areas. AWL was among the first companies to introduce flaxseed oil in India. AWL has also been studying olive oil and might consider adding it to the value-added segment along with pasta and noodles. They have recently introduced poha as well.
- IPO open from: Jan27th – Jan31th 2022
- Face value: ₹1
- Price Band: ₹218-230
- Market Lot: 65shares
- Minimum Investment: ₹14,950
- Listing on: BSE and NSE
- Total issue size: up to ₹3,600crores
- Fresh Equity Issue: up to ₹3,600crores
- Promoters: Adani Enterprises Limited, Adani Commodities LLP and LPL are the company promoters
- Book running lead managers: BNP Paribas, BofA Securities India Limited, Credit Suisse Securities (India) Private Limited, HDFC Bank Limited, ICICI Securities Limited, J.P. Morgan India Private Limited, Kotak Mahindra Capital Company Limited.
The offer is broken up into the following investor classes:
The company aims to raise ₹3,600 crores through this IPO for capital expenditure, reduce debt, and for merger and acquisitions as it seeks to become India’s biggest food and FMCG company.
- ₹ 1,900 crores will be used for the expansion of current manufacturingfacilities.
- ₹ 1,058.90 crores for repayment of debt.
- ₹ 450 crores will be used for funding strategic acquisition and investment
- Rest is for General corporate purposes.
- Diversified product: It is one of the few FMCG companies that offers most of the primary kitchen commodities for the Indian consumer. Its diversified product range with market-leading brands will help the company increase its market share and revenue.
- Market Leader: The company’s lead image “Fortune” is the biggest selling edible oil brand in India with an18.30% market share in edible oil market. It also maintains leadership in packaged food market.
- Strong raw material sourcing: Adani Wilmar’s source of raw materials has come from top global suppliers also Wilmar International, a promoter group company is the largest palm oil supplier in the world and provides an additional competitive edge as need not depend on third party suppliers.
- One of the largest basic oleochemical manufacturers in India in terms of revenue, and the largest manufacturer of glycerin and stearic acid.
- Pan-India distribution network: Its distributor’s numbers experienced a 33% growth. Adani Wilmar has 5,590 distributors in India located in 28 states, catering to over 1.6 million retail outlets, representing approximately 35% of the retail outlets in India.
- Dependence on imports of raw materials: The Company largely depends on imports for its raw material source. For the financial years 2021, a total of 59.76 % cost of raw materials was imported.
- Dependence on edible oil business for significant portion of the revenue, 82.23% of revenue in March’21. Any demand reduction could harm the business.
- Any adverse effect of unfavorable local or global weather patterns will impact the business significantly.
- Price fluctuations in commodity prices will affect profitability
- Highly regulated business: Adani Wilmar engaged in a highly regulated industry that required certain approvals from relevant regulatory. Any delay or failure to obtain such approvals may negatively impact the business.
Adani Wilmar Ltd’s revenue increased to ₹24,957 crores for the six months ended September in the current fiscal year as against ₹16,273 crores in the corresponding period of the previous year. During the same period, profit grew to ₹357 crores from ₹288.7 crores.
|(₹ in crores)
|6M Ended 30-Sep-21
|Year Ended 31-Mar-21
|Year Ended 31-Mar-20
|Profit After Tax
Should you invest in Adani Wilmar IPO?
At the upper price band of ₹230, the company is valuedataP/E multiple of 36x based on it’s FY21 EPS share of ₹6. The company has cemented its market leadership in the edible oil industry in India and has consistently been churning profits since FY19.
We recommend that investors can Subscribe to the issue, with a long-term investment horizon, as the company has a promising growth trajectory enforced by its capable management and constant product innovation.