Introduction:
Adani Wilmar shares encountered a turbulent trading session today, experiencing fluctuations from the opening bell to the closing hour. The stock, initiated at ₹295 per share, briefly dipped to ₹290 and faced further correction by 2:30 PM, touching ₹285.80. However, a late-hour surge propelled it to close with a gain of 5.32% at ₹310.70 per share.
Market Performance:
From the intraday low, the stock rebounded, marking a recovery of ₹24.9 or 8.71%. Adani Wilmar, a joint venture between Adani Group and Wilmar International, closed at a 21-month low. Compared to its record high of ₹841, the current value reflects a decline of 63%.
Financial Snapshot:
On November 01, the company reported a net loss of ₹130.73 crore for Q2 FY24, a significant shift from the net profit of ₹48.76 crore in the same period last fiscal. The revenue from operations in Q2FY24 witnessed a 13% decline to ₹12,267.15 crore, primarily attributed to a substantial correction in edible oil prices.
Operational Challenges:
On the operational front, Earnings Before Interest, Tax, Depreciation, and Amortization (EBITDA) saw a 43% drop to ₹144 crore, with the EBITDA margin contracting to 1.2% from 1.8% YoY. The Q2FY24 performance prompted domestic brokerage firm ICICI Securities to maintain a ‘reduce’ rating on the stock, lowering the target price to ₹295 from ₹350.
Risks and Outlook:
ICICI Securities cited key risks, including heightened volatility in raw material prices and potential challenges in scaling up the food business. The brokerage revised down earnings estimates for FY24E, emphasizing a substantial impact on profitability. It projected a revenue, EBITDA, and PAT CAGR of 1%, 10 and 24% over FY23–25E, indicating a cautious outlook for Adani Wilmar.
