Shares of Adani Wilmar, the newest Adani Group firm to get listed, has surged around 90 percent since its listing in February 2022. The stock, which listed at around ₹221 (a 4 percent discount to its issue price of ₹230), has surged around 90 percent to hit its new high of ₹420 on March 23, 2022 (today).
After this massive rise in just a month, global brokerage JP Morgan believes that the stock is perfectly priced now and has initiated coverage on the stock with a 'neutral' rating. “We initiate coverage on Adani Wilmar (AWL) at Neutral with a Mar 2023 price target of ₹367,” it said.
The brokerage has a 12-month target price of ₹367, which actually indicates a downside of 12 percent from its current peak. However, the target price reflects an upside of around 60 percent from its issue price of ₹230.
JPMorgan, in its report, noted that Adani Wilmar enjoys market-leading positions across kitchen essentials such as branded edible oil, wheat flour and rice, with a large household reach.
"The company's growth strategy is premised on scaling up market share in existing categories, diversification into more FMCG segments, the pursuit of strategic acquisitions (widening product/geographic reach) and an improved margin/return profile over the medium term," the brokerage added.
It expects the company's revenue to increase at a CAGR of 19 percent and EBITDA at 24 percent over FY21-FY24E. It further pointed out that edible oil price moves, the scale-up of non-oil staples and potential M&A activity as key share price catalysts for the firm.
However, last week, Bank of America Securities initiated coverage on Adani Wilmar with a 'buy' rating and target price of ₹420, indicating no upside from the current peak but also no downside.
As per BofA, the stock is a defensive play because of the pricing power that they have and also some defensive products as well. The firm is expecting a 38 percent EPS CAGR in FY22-FY23E. It added that market share growth and strong traction in the food segment are the two key catalysts, which are likely to be positives for this stock.
Adani Wilmar is a 50:50 joint venture between the Adani Group and Singapore’s Wilmar Group. It is the latest to enter, the seventh listed firm of the Adani group after Adani Enterprises, Adani Ports, Adani Power, Adani Transmission, Adani Green and Adani Total.
It sells cooking oils and other products like wheat flour, rice, pulses, sugar and packaged food under the Fortune brand.
The company's open for subscription between January 27 and January 31 and it was subscribed more than 17 times during this period.
For the December quarter, it reported around 66 percent YoY rise in its net profit to ₹211.4 crore while its revenue increased 40.6 percent YoY to ₹14,379 crore.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of MintGenie.