Adani Wilmar IPO – Is this a multi bagger stock for investment?

Adani Wilmar IPO – Is this a multi bagger stock for investmentAdani Wilmar IPO (Adani Wilmar Limited IPO) Details

Ahmedabad based Adani Wilmar is coming up with an IPO now. Adani Wilmar is the joint venture between Adani group and Wilmar Group. This IPO would open for subscription on 27th January, 2022. Adani Wilmar Limited is one of the leading FMCG company offering essential kitchen commodities for Indian consumers. Should you invest in Adani Wilmar IPO? Would Adani Wilmar IPO turn as multi bagger stock for investment? This article would provide IPO details, Dates, GMP, Listing Date and conclusion on whether this is good or bad for investment.

Also Read: Best Multibagger stocks to invest in 2022

About Adani Wilmar Limited

Company is a joint venture between Adani Group (multinational diversified business group) and Wilmar Group (Asia’s leading agribusiness group listed on Singapore stock exchange).

Company is one of the few large FMCG food companies in India to offer most of the essential kitchen commodities for Indian consumers, including edible oil, wheat flour, rice, pulses and sugar for approx 66% of the spend on essential kitchen commodities in India.

Company offers a range of staples such as wheat flour, rice, pulses and sugar.

Its products are offered under a diverse range of brands across a broad price spectrum and cater to different customer groups.

Its portfolio of products spans across 3 categories

(i) edible oil

(ii) packaged food and FMCG

iii) industry essentials.

A significant majority of its sales pertain to branded products accounting for approximately 73% of its edible oil and food and FMCG sales volume for the financial year 2021.

They have 22 plants which are strategically located across 10 states in India, comprising 10 crushing units and 18 refineries. Out of the 18 refineries, ten are port-based to facilitate use of imported crude edible oil and reduce transportation costs, while the remaining are typically located in the hinterland in proximity to raw material production bases to reduce storage costs. Its refinery in Mundra is the one of the largest single location refineries in India with a designed capacity of 5,000 MT per day. In addition to the 22 plants they own, they also used 28 leased tolling units as of March 31, 2021, which provided with additional manufacturing capacities. Hence, they have and intend to continue to have an asset-light business model.

Adani Wilmar Limited IPO – Details, Dates, Price and Size

IPO Opening Date 27-Jan-22
IPO Closing Date 31-Jan-22
Issue Type Book Built Issue IPO
Face Value Rs 1 per equity share
IPO Price band Rs 218 to Rs 230 per equity share
Lot Size 65 Shares
Min Order Quantity 65 Shares
Listing at BSE and NSE
Total Issue Size Rs. 3600 Crores
Employee Discount Rs. 21 Per Share

Adani Wilmar IPO RHP

What are the competitive strengths of Adani Wilmar Limited?

1) Company has differentiated and diversified product portfolio with market leading brands to capture large share of kitchen spends across India

2) Leading consumer product company in India with leadership in branded edible oil and packaged food business

3) Market leading position in industry essentials

4) Strong raw material sourcing capabilities

5) Company with integrated business model with well-established operational infrastructure and strong manufacturing capabilities

6) Company with extensive pan-India distribution network

7) Focus on environmental and social sustainability

8) Strong parentage with professional management and experienced board

What are the Objects of the IPO Offer?

Adani Wilmar IPO Size is Rs 3,600 Crores and these proceeds would be used for the following:

  • Funding capital expenditure for expansion of existing manufacturing facilities and developing new manufacturing facilities
  • Repayment/prepayment of borrowings
  • Funding strategic acquisitions and investments
  • General corporate purposes

Who are the promoters of Adani Wilmar Limited?

Adani Enterprises Limited, Adani Commodities LLP and Lence Pte. Ltd are the promoters of the company.

How is the company financial track record?

Here are the total assets, revenues and profits of the company in the last 2 years and 6 months.

Financial Year ending / Period ending (Amt in Mns)
Particulars FY20 FY21 Sep-21
Total Assets 1,17,859.2 1,33,266.4 1,79,237.1
Revenues 2,97,669.9 3,71,956.6 2,49,572.9
Profit After Tax 4,608.7 7,276.5 3,571.3
Profit % 1.55% 1.96% 1.43%

Why to invest in Adani Wilmar IPO?

Here are the positive factors in this company.

1) Company is leading FMCG food company offering most of the essential kitchen commodities for Indian consumers, including edible oil, wheat flour, rice, pulses, and sugar.

2) It has diversified portfolio catering to mostly daily essentials. It has pan India network and part of Adani and Wilmar group.

3) Company has generated strong revenue growth in the last 2 years. Its revenues increased from Rs 29,766 Crores in FY20 to Rs 37,195 Crores in FY21.

4) Company has strong margin growth where its margins increased from Rs 460.8 Crores in FY20 to Rs 727.6 Crores in FY21.

5) The entire IPO Proceeds would be utilized for company growth and expansion.

Risk Factors of investing in Adani Wilmar IPO

1) Unfavorable local and global weather patterns may have affected its business.

2) Company operations are dependent on supply of large amounts of raw material such as unrefined palm oil, soyabean oil and sun flower oil, wheat, paddy and oilseeds. Company do not have long term agreements with suppliers for its raw materials. Any increase in the cost of such raw materials or a shortfall in the availability can affect its business.

3) Company depends significantly on imports of raw materials in addition to domestic supplies. Any inadequate supply or increase in costs can affect business.

4) Company has a significant portion of its revenue from edible oil business and any reduction in demand can affect business.

5) Company products are in the nature of commodities and their prices are subject to fluctuations and can affect company profitability.

6) Investors should read complete risk factors indicated in the RHP of the IPO document before investing in this IPO.

Frequently Asked Questions (FAQs)

What is the minimum amount to subscribe to this IPO?

Investors need to apply for 65 shares at minimum lower price band of Rs 218 per share = Rs 14,170. Similarly, the minimum amount to be applied on upper price band of Rs 230 = Rs 14,950.

What is Adani Wilmar IPO Rating?

Company do not require to get an IPO rating as this issue is for equity shares. Currently, Adani Wilmar short term rating is “CRISIL A1+” and long term rating is “CRISIL A+”.

How much portion allocated to each group of investors in this IPO?

1) QIB - Not less than 50% of the offered shares 2) Retail - Not less than 35% of the offered shares 3) NII / HNI - Not less than 15% of the offered shares

Is it good or bad for investment?

Invest should always invest in a company that has strong financial track record. This company has generated strong revenues in the last 2.5 years. Its margins also improved significantly during the same period. Investors should invest in consistent profit making companies to reward in medium to long term.

What is Adani Wilmar IPO GMP today?

GMP is nothing but the premium at which the shares are trading in offline market. This is just an indication about the IPO price as it is unorganized market. There are no offline trades happening in this IPO.

Adani Wilmar Limited IPO Valuation

1) Adani Wilmar IPO price band is Rs 218 to 230 per share.

2) If we consider last 3 years weighted average EPS of Rs 5.07 and the upper price band of Rs 230, P/E works out to be 45.3x.

3) Similarly, if we consider FY2021 EPS of Rs 6.37 and the upper price band of Rs 230, P/E works out to be 36.1x.

4) Its latest 6 months EPS is currently not available for comparison.

5) Means company is asking IPO price of Rs 230 in the P/E ratio of 36x to 45x

As per the DRHP (RHP is yet to be available) filed few months back, there are listed peers like Nestle India trading at P/E 81x (Highest) and Britannia Industries at P/E 44x (Lowest) and the industry average is 66x. Hence Adani Wilmar IPO Price at 36x to 45x is reasonably priced.

Adani Wilmar IPO dates for subscription, Allotment and Listing

Offer Open 27-Jan-22
Offer close 31-Jan-22
Finalization of Allotment 03-Feb-22
Initiation of Refunds 04-Feb-22
Credit to Demat Account 07-Feb-22
IPO Shares Listing Date 08-Feb-22

How to buy Adani Wilmar IPO online through Zerodha?

You can login to your demat account, visit the IPO section and apply for this IPO during the subscription dates.

You can also apply this IPO on Zerodha. If you do not have Zerodha account, sign-up here and proceed to the next step.

Zerodha customers can apply in this IPO by login into Zerodha Console submitting an IPO application form.

Follow below steps to apply this IPO in Zerodha platform:

1) Visit the Zerodha portal and login to Console.

2) Go to Portfolio and click the IPOs link.

3) Visit ‘Adani Wilmar Limited IPO’ row and click the ‘Bid’ button.

4) Enter your UPI ID, Qty and the Price which you want to bid.

5) Click on ‘Submit’ IPO application form.

6) Visit the UPI App (net banking or BHIM) to approve the mandate.

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Adani Wilmar IPO Review – Should you invest or avoid?

Adani Wilmar is one of the leading FMCG food company offering most of the essential kitchen commodities for Indian consumers. This company is from Adani group and Wilmar group which has strong support.

Company has strong revenue growth in the last 2.5 years.

Company has good margin growth in the last 2.5 years.

Its issue price is reasonably priced.

Considering all positive and risk factors, investors can invest in this IPO for medium to long term perspective.

Do you agree with my views?

Did you like our IPO Analysis, then share it with your friends on WhatsApp, FB, Twitter and Telegram?

Suresh KP

6 comments

  • Swaminathan MAHADEVAN

    Suresh ji, thank u very much for detailed analysis in every report you make. I have one small query in this report you made…normally such a low profit margin IPO you used to mention saying for avoiding only most of times…here what is the difference point which makes you go the other way….I am not questioning ur approach …only want me to learn better from you as a regular follower of you.

    • Hello Swaminathan, They are into FMCG business and such margins would be very low (they buy, sell and invest again multiple times during the year). Yes, I did not specifically highlighted that in IPOs lime Dmart etc.,. Would indicate one comment in IPOs going forward wherever it is applicable.

  • Suresh Gopalan

    Thanks for the detail analysis of Adani Wilmar. Gives us an idea about the company.

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