Last Updated on Sep 12, 2022 by Aradhana Gotur
Another noteworthy company called Adani Wilmar is set to open for subscription on 27 January. But before taking an investment decision it is vital to research this investment opportunity. Let’s go a little deeper.
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About Adani Wilmar
Adani Wilmar Ltd. (AWL) is one of the few significant fast-moving consumer goods (FMCG) firms in India. The company’s major offerings include basic kitchen commodities.
According to the Technopak Report, commodities including edible oils, wheat flour, rice, legumes, and sugar account for over 66% of major kitchen commodity consumption in India. Of these, Adani Wilmar offerings are wheat flour, rice, lentils, edible oils and sugar. Its goods are available under distinct names and at varying price points, catering to a wide range of client segments.
Adani Wilmar is a joint venture formed in 1999 by the Adani Group, a multinational diversified business group with significant interests in transportation and logistics, as well as energy and utility sectors. The Wilmar Group, on the other hand, is one of Asia’s leading agribusiness groups and the seventh largest listed company by market capitalization on the Singapore Exchange as of 30 September 2021.
AWL benefits from the Adani Group’s considerable expertise in domestic trade and advanced logistics network in India, as well as the Wilmar Group’s worldwide sourcing skills and technical expertise.
Its product offering is divided into three categories:
- Edible oil
- Industry essentials
- Packaged food and FMCG
The vast bulk of sales are pertaining to branded items, which accounted for around 73% of edible oil, food, and FMCG sales volume in FY 2021 (excluding industry essentials that were offered on a non-branded basis).
Operations of Adani Wilmar
Adani Wilmar has 22 factories in India, including 10 crushing units and 19 refineries, as of the date of this Red Herring Prospectus i.e., January 2022, strategically positioned throughout 10 states. 10 of the 19 refineries are port-based in order to simplify the use of imported crude edible oil and minimise transportation costs, while the rest are generally located in the outlands near raw material production bases in order to reduce storage costs.
It had 5,590 distributors in India as of 30 September 2021, spread over 28 states and eight union territories, serving over 1.6 mn. retail outlets (Source: Technopak Report).
Additionally, AWL has 88 depots in India, with an aggregate storage area of roughly 1.8 mn sq. ft. around the nation to assure product availability; and 685 individuals in the sales and marketing team in India as of the same date. It makes use of an edible oil distribution network for packaged goods, and as of 30 September 2021, the firm accounted for around 64% of edible oil distributors in India that catered to packaged food distribution.
Promoters of the company
Adani Enterprises Limited (AEL), Adani Commodities LLP (ACL) and Lence Pte. Ltd. (LPL) are the promoters of this company.
About Adani Wilmar IPO
- This IPO consists of a fresh issue of shares worth Rs. 3600 cr.
- The opening date for this IPO is 27 January 2022 and the closing date is 31 January 2022.
- Adani Wilmar IPO is likely to be listed on the BSE and NSE.
- The face value of each share is Re. 1.
- The set price band of this IPO is Rs. 218 – Rs. 230.
- The allocation is expected to be finalised by 3 February, and refunds will be initiated by 4 February. Meanwhile, credit of shares in the Demat account is expected by 7 February.
- One lot consists of 65 shares and is worth Rs. 14,950 at the upper range of the pricing band.
Book running lead managers and registrar of the Adani Wilmar IPO
The joint global coordinators and lead managers of the Adani Wilmar IPO are Kotak Mahindra Capital Co. Ltd., J.P. Morgan India Pvt. Ltd., BofA Securities India Ltd., Credit Suisse Securities India Pvt. Ltd., ICICI Securities Ltd., HDFC Bank Ltd., and BNP Paribas. The issue’s registrar is Link Intime India Pvt. Ltd.
Reservation of Adani Wilmar IPO for various investor categories
- Rs. 107 cr. is reserved for its eligible employees, and the company is offering a discount of Rs. 21 per share to them.
- Rs. 360 cr. worth shares reserved for the shareholders of Adani Enterprises Ltd. (AEL). For those who were holding shares in AEL as of the date of RHP i.e. January 2022, are eligible for application in this quota.
From the residual portion, it has earmarked:
- 35% for retail investors.
- 15% for the Non Institutional Individuals (NII).
- 50% for the Qualified institutional buyers (QIBs).
Objects of the Adani Wilmar IPO
- The sum of Rs. 1,058.90 cr. will be utilised to prepay or repay all or a portion of the company’s outstanding borrowings.
- The sum of Rs. 1,900.00 cr. will be utilised to fund working capital requirements.
- The sum of Rs. 450.00 cr. will be utilised towards funding strategic acquisitions and investments.
- General corporate purposes.
Financials of Adani Wilmar
- As of 31 March 2021, it has posted earnings per share (EPS) of Rs. 6.37.
- As of 31 March 2021, the net asset value (NAV) stood at Rs. 28.86.
- As of 31 March 2021, it has posted a return on net worth (RoNW) of 22.06%.
- As of 31 March 2021, it reported an EBITDA of Rs. 1,430.55 cr.
Following are the financials for 2020 and 2021
According to the offer paperwork, the company’s listed peers include the following:
- Hindustan Unilever Limited
- Britannia Industries Limited
- Tata Consumer Products Limited
- Dabur India Limited
- Marico Limited
- Nestle India Limited
They are not, however, genuinely comparable on an apple-to-apple basis.
Strengths of the company
- Diversified product assortment with prominent brands covering the majority of an Indian kitchen’s everyday necessities.
- Strong brand recognition and a large customer base.
- In India, it is the market leader in branded edible oil and packaged food.
- India’s largest basic oleochemical producer.
- Strong raw material sourcing capability from leading worldwide vendors.
- An integrated company model with a well-established operational infrastructure and excellent production capabilities.
- A solid distribution infrastructure underpins a pan-India distribution network.
- Concentrate on environmental and social sustainability.
- Professional management and a well-versed board of directors.
Risks of the Adani Wilmar
Investments in equities and equity-related securities are risky. Before making an investment choice in this IPO, you should carefully consider the risk factors.
- AWL’s business is vulnerable to commodity-related risks such as price changes in international markets, seasonality variations, and foreign currency concerns. The oil refining business is regarded as a high volume/low margin one.
- It is significantly dependent on raw material/finished goods imports in addition to domestic supplies, and a variety of factors may result in an insufficient supply of raw materials/finished goods or an increase in costs in order to secure sufficient raw materials/finished goods to meet the operational requirements.
- The COVID-19 pandemic has had an impact on, and may continue to have an impact on, the global economy and the markets in which AWL functions.
- Improper handling, processing, or storage of raw materials or products, as well as spoilage and damage to such raw materials and products, or any real or perceived contamination in the products, could subject it to regulatory and legal action, harm its reputation, and have an adverse effect on its business, results of operations, and financial condition.
Adani Wilmar offers a diverse product line spanning oil kinds and pricing points. It boasts the most diverse range of oil products in its portfolio, with Fortune as its most well-known brand. It has maintained its global leadership position in edible oil and is increasing its market share in packaged foods and other industrial needs. If you are interested in this investment opportunity, make sure to conduct thorough research before subscribing to the Adani Wilmar IPO. To ensure a seamless experience while subscribing to Adani Wilmar IPO, read on how to subscribe to an IPO.