Adani Wilmar to debut on Tuesday. What could be listing price?

Adani Wilmar IPO

Adani Wilmar, one of the largest FMCG companies in India, is expected to start the first day of trade with around 15 percent premium over issue price on Tuesday, experts feel, citing market leadership in branded edible oil industry and packaged food business, diversified products portfolio, healthy financials, strong brand recall, and broad customer reach.

The public issue received good response, getting subscribed 17.37 times during January 27-31, with support from all kinds of investors, though market volatility impacted a bit. Non-institutional investors took lead, putting in bids that were 56.30 times the allotted quota, followed by shareholders whose reserved portion was subscribed 33.33 times.

The portion set aside for qualified institutional buyers (QIBs) and retail investors saw 5.73 and 3.92 times subscription respectively. Employees’ book was subscribed half a percent only.

Experts largely expect the listing price could be around Rs 265 against issue price of Rs 230 per share, resulting in a market capitalisation of Rs 34,500 crore against IPO value of Rs 30,000 crore.

“Adani Wilmar, a market leader in the branded edible oil and packaged food industries, is expected to give listing gains of around 15 to 20 percent. Since the issue witnessed moderate response due to ongoing negative sentiments and volatility in the secondary market, we expect it to list in the range of Rs 260-265,” said Likhita Chepa, senior research analyst at CapitalVia Global Research.

The company is one of the largest oleochemical manufacturers in India.

“It has pan-India network with robust distribution infrastructure and top-quality global suppliers. It has a complete integrated business model run by professional and experienced management. Therefore, the listing price would be Rs 265 including listing gains of Rs 35 per share,” said Ankur Saraswat, research analyst at Trustline Securities.

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FMCG food company Adani Wilmar raised Rs 3,600 crore through its public issue. The company is going to utilise funds for expansion of manufacturing facilities and developing new facilities, repaying of debts, funding strategic acquisitions and investments, and general corporate purposes.

The company offers most of the essential kitchen commodities including edible oil, wheat flour, rice, pulses, and sugar, and a diverse range of industry essentials including oleochemicals, castor oil and its derivatives, and de-oiled cakes. Its flagship brand Fortune is the largest selling edible oil brand in India.

Adani Wilmar traded at Rs 255-260 per share in the grey market, a 11-13 percent premium over issue price, as per the IPO Watch and IPO Central.

“Considering decent response from QIB and high net worth individuals, we assume listing would be with a reasonable upside around Rs 265-275 levels, which translates to 15-20 percent premium over the upper end of the IPO price of Rs 230,” said Prashanth Tapse, vice president (research) at Mehta Equities.

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“A decent listing gain seems to be justified in the current market scenario on the back of leadership position in branded edible oil and packaged food business followed by strong brand recall,” he added.

Among these analysts, only Astha Jain, senior research analyst at Hem Securitas, expects the listing premium in single digit at 5-8 percent premium over issue price.

The financials reported by the company so far remain strong. Consolidated profit for the year FY21 grew 58 percent to Rs 727.65 crore against Rs 460.87 crore profit reported in previous year. Consolidated revenue during the year at Rs 37,090.42 crore increased by 25 percent from Rs 29,657.04 crore in FY20.

Profit in the first half of FY22 rose by 24 percent to Rs 357.13 crore and revenue increased by 54 percent to Rs 24.874.52 crore compared to year-ago period.

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