Adani Wilmar IPO comprises fresh issuance of about 15.65 crore shares worth Rs 3,600 crore . Adani Wilmar, which sells cooking oils and some other food products under the Fortune brand, is a 50:50 joint venture between business conglomerate Adani group and Singapore based Wilmar. After the IPO, the promoter’s shareholding in Adani Wilmar will come down from the current 100 per cent to 87.92 per cent.

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Adani Wilmar IPO Details:

Issue OpensThu 27th January, 2022
Issue Closes Mon, 31st January, 2022
Issue DetailsInitial Public Offering o aggregating  ₹ 3,600 Cr
Face Value₹ 1/-
Issue Size (₹ Cr)₹ 3,600 Cr
Bid Lot65 Shares
Price Band₹ 218 – 230
AEL Shareholders ReservationEquity Shares aggregating upto ₹ 360 Cr
QIB50% of the net offer 
NIB15% of the net offer ( Approx.20,432,609^ Shares ) (₹     470 Cr)
Retail35% of  offer ( 47,676,087 Shares, ₹ 1097 Cr)
Applications for 1x Retail ~ 7.3 Lac
.

Updates :

  • ANCHOR ISSUE: Ahead of its IPO, Adani Wilmar Ltd garnered Rs 940 crore from 15 anchor investors.
  • The government of Singapore was top bidder picking up shares worth Rs 368 crore or 39% of the anchor book. Monetary Authority of Singapore, HDFC Mutual Fund, Nippon India Mutual Fund, Aditya Birla Sun Life Mutual Fund, Societe Generale, and Jupiter India Fund were among other top investors that participated in the anchor book.
  • 16.8% of total anchor book were allocated to three domestic mutual funds through total four schemes.

About Adani Wilmar

  • Adani Wilmar 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 in India.
  • 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:
    • edible oil
    • packaged food and FMCG
    • industry essentials.
  • Adani Wilmar has 22 plants located across 10 states in India, comprising 10 crushing units and 18 refineries..
  • Adani Wilmar’s refinery in Mundra is the one of the largest single location refineries in India.
  • Adani Wilmar also use 28 leased units as of March 31, 2021 as additional manufacturing capacities

Adani Wilmar IPO: Financials

Particulars / (₹ In Cr)2021(06)2020(06)2021 (12)2020 (12)2019 (12)
Revenue from Operations24,874.5216,188.5937,090.4229,657.0428,797.46
Revenue Growth (%)53.7% 25.1%3.0% 
EBITDA889.66743.11,430.561,419.481,253.46
EBITDA Margin (%)3.6%4.6%3.9%4.8%4.3%
Profit Before Tax454.48382.59756.64609.01567.25
Net Profit357.13288.79727.65460.87375.52
Net Profit (% )1.4%1.8%2.0%1.6%1.3%
Equity Share Capital114.3114.3114.3114.3114.3
NAV(₹ )31.9225.0128.8622.4918.47
ROCE (%)5.79%5.79%11.06%12.76%12.75%
Fixed Asset Turnover Ratio5.534.179.317.778.57
Post IPO Equity129.94
FV1
IPO Price230
EPS ( FY22 ann)5.50
PE (TTM)  net of EO Items37.70.
PE41.84
Market Cap29886
Market Cap / Sales (ann)0.81

Salient Points

  • Adani Wilmar will be the seventh Adani group company to go public.
  • Adani Wilmar had earlier indicated IPO size at Rs 4500 cr. Now reduced to Rs 3600 cr.
  • Out of IPO proceeds of Rs. 3,600 crore:
    • Rs. 1,900 cr. for capex over 3 years, across edible oil and food
    • Rs. 1,060 cr. debt repayment, to halve Rs. 2,200 cr gross debt
    • Rs 450 cr. strategic investments
  • Adani Wilmar command’s 18% market share in India’s branded edible oil market, 75% of edible oil revenue is from branded sales while 25% is B2B/institutional sale

Cons

  • Heavy dependence on imported raw materials.
  • Adani Wilmar imports ~ 60 %of its raw materials,
  • Any restrictions on import may affect it drastically
  • volatility in raw material prices\
  • increase in competition
  • There can be losses in Commodity hedging.

Adani Wilmar IPO: Assessment

  • Packaged food market in India is under-penetrated, offering significant potential growth,
  • Adani Wilmar has strong brand recall.
  • The issue is entirely a fresh issue of shares.
  • Over 65% of Adani Wilmar revenues comes from its Oil business. 
  • Adani Wilmar command’s 18% market share in India’s branded edible oil market, 5% of the edible oil revenue is from branded sales. 25% is contributed by B2B/ institutional sale.
  • Now there is focus on growth of FMCG and packaged food business and shift towards value added products.
  • This can result in expansion of margins which are presently low.
  • Company reaches 1 in 3 Indian households.
  • Strong parentage with professional management and experienced board.
  • Out of its 18 refineries, ten are port based which facilitate use of imported crude edible oil and reduce transportation costs, Te remaining are mostly located in the h in proximity to raw material production regions to reduce storage and transport costs.
  • Extensive pan-India distribution network. 5,500+ distributors catering to 1.6 million retail outlets.
  • Company is largest exporter of castor oil/castor oil derivatives and also among the 5 largest exporters of oleochemicals in India.
  • Strong raw material sourcing capabilities from different countries.
  • Adani Wilmar IPO is coming with a TTM EPS of Rs 6.10. At the upper price band P/E works out to 37.70..
  • Listed peers such as Hindustan Unilever, Britannia Industries , Tata Consumer Products trades at higher P/E.
  • Against a sales of Rs. 37000 crore plus , company is seeking market valuation of Rs. 30000 crore.
  • Thus valuation looks to be at reasonable levels.

Adani Wilmar IPO: Apply or Not

  • Risk  :  Low
  • Reported GMP   :  Rs. 35-40. There has been drop in GMP from Rs100 due to market correction.
  • Listing Gains  :  Reasonable Chances. Bumper listing looks difficult due to market meltdown.
  • Hold for Long Term  :  Looks OK. Cheaper than Peers.
  • Subscription  :  Expected to be average due  to current market downturn.
  • I am going to apply in this  IPO.  As I will apply in shareholder quota, will decide on quantum of application on Day 3 based on demand for IPO.
  • Above are my views only. Please do your own diligence.

Standard disclaimer:  I am not a SEBI registered analyst and above analysis is for educational purpose only. Iam a postgraduate in engineering & Management . Also Certified in some exams like NISM-Series-V-A: Mutual Fund Distributors Certification, NISM-Series-X-A: Investment Adviser (Level 1) Certification and NISM-Series-X-B: Investment Adviser (Level 2)  Examination. This post is my view on the subject matter and is only academic and exploratory in nature. It is not meant to influence investment decisions of investors.  I may have bias/vested interest in covered Stock/Mutual Funds/NCD etc. due to my own investment or  leaning. Further my understanding of the areas on which I write may be imperfect or incomplete and data could be wrong due to limited time and resources at my disposal. Please do your own due diligence as stock market/MF investments have high degree of inherent risk.

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