The three-day initial public offering (IPO) of Adani Wilmar will open for public subscription tomorrow, January 27, 2021. The price band has been fixed at ₹218-230 a share for its public issue through which it aims to raise up to ₹3,600 crore. The edible oil major on Tuesday said it has garnered ₹940 crore from anchor investors.
The public issue of Adani Wilmar comprises fresh issue of equity shares and there will not be any secondary offering.
As per market observers, Adani Wilmar shares premium (GMP) has remained steady at ₹45 in the grey market today. The company's shares are expected to list on stock exchanges BSE and NSE on February 8, 2022.
“Adani Wilmar has strong brand recall, wide distribution, better financial track record and healthy ROE. Considering all the positive factors, we believe this valuation is at reasonable levels. Thus, we recommend a subscribe rating on the issue," said Angel One in a note. Though, volatility in raw material prices and increase in competition could impact the profitability of the company, the brokerage added.
The company plans to use its proceeds from the issue to fund capital expenditure, repayment of debt and funding strategic acquisitions and investments.
“At higher price band of ₹230, AWL is demanding a P/E multiple of 37.5x, which is at discount to peer average of 57.6x. Its edible oil business is likely to have a secular growth trend, but there is a huge untapped market for its Food & FMCG business segment. Thus considering the above observations, we assign a 'SUBSCRIBE' rating for the issue," said analysts at Choice Broking.
Adani Wilmar, a 50:50 joint venture company between Gautam Adani-led congolomerate Adani group and Singapore's Wilmar group, sells cooking oils under the Fortune brand. Apart from cooking oils, it sells food products like rice, wheat flour, and sugar. It also sells non-food products like soap, handwash, and sanitisers.
“After a long haul, an Adani group company is going to debut in capital markets by bringing an IPO. Adani Wilmar is one amongst the few large FMCG food companies. The revenues and EBITDA are growing at a CAGR(2015-2020) of 11.28% and 20.65% respectively. The concern of low PAT margins is addressed by focusing on value-added products and diversifying revenue streams. The strong parentage should ensure good subscription to the offer," said Abhay Doshi, founder of Unlisted Arena.
