Adani Wilmar share price falls 2% even as Q1 net profit rises 10% on-year; should you buy, hold or sell-

Adani Wilmar share price falls 2% even as Q1 net profit rises 10% on-year; should you buy, hold or sell?

Adani Wilmar share price fell over 2 per cent on Thursday after the edible oil major posted a 10% rise in consolidated net profit at Rs 194 crore for the quarter ended June as the company’s sales and volumes improved during the quarter. Adani Wilmar’s revenue from operations rose 30% on-year to Rs 14,731.62 crore during the quarter as the volumes increased 15% on-year to 1.19 million metric tons. So far this year, Adani Wilmar stock has rallied over 153% and analysts see further upside as according to them an improving margin profile with volume growth augurs well for the long term for the Adani Group company. Adani Wilmar shares were quoting at Rs 681 on NSE, down 2.5% from previous close.

After the Q1 earnings, Angshu Mallick, Managing Director, and CEO of Adani Wilmar Limited said, “Adani Wilmar has continued to demonstrate a steady growth on overall volumes, led by an exceptional growth in the foods business. This is despite multiple headwinds that we saw during the quarter with inflation and low consumer offtake being the major concern areas. Our growth has been driven by GTM strategy focused on increased penetration in the semi-urban & rural regions. This increased penetration is also enabling us to grow the foods business at a faster pace.”

Uptick in demand on the back of festivities, weddings

Going forward, the company expects an uptick in the demand in Q2FY23 on the back of festivities and weddings across the country. The company particularly expects growth in demand from rural markets, with expectations of a good monsoon. Further, it expects categories like functional oils/health oils such as rice-bran oil, mustard oil, and blended oils to grow faster.

Should you buy, hold or sell Adani Wilmar shares?

According to analysts at Edelweiss Securities, all segments of Adani Wilmar posted strong revenue growth. Volume-led growth in segments aided the margin profile. Kohinoor brands for HORECA relaunched in June; consumer brands’ relaunch is slated for August and would drive premiumisation, they said. “While concerns around low rainfall in populous states and inflation remain, the focus on volume and penetration expansion are positives,” the brokerage said. Accordingly, it increased FY23E and FY24E EPS by 2.4% and 2.3% respectively. It maintains a ‘buy’ rating on the stock with a revised SoTP-based target price of Rs 743, up from Rs 735 earlier.

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Located in India, Adani Wilmar Limited is a key kitchen supply fast-moving consumer goods (FMCG) company. On Wednesday, the company released its June quarter results, showing a sales increase of 30.2% year over year to Rs 14,731.62 crore. Additionally, earnings increased from Rs 175.7 Cr to Rs 193.59 Cr in the same quarter. On an annual basis, volume has climbed by 15%. This rise was mostly caused by flour and rise. At its present market price of Rs. 683, the stock is selling at a PE ratio of 117, a premium valuation when compared to the sector’s PE of 47. Technically, the stock is in an uptrend and is situated around the bottom range of the uptrend line. One may hold the stock with a stop loss of Rs 640 and and a target price of Rs 780,” said Rahul Goud, Research Analyst – Equity Research, CapitalVia Global Research.

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