Adani Wilmar Limited - IPO Note


Adani Wilmar Limited - IPO Note


Price range
Rs. 218-230
Issue Period:
Jan 27, 2022
Jan 31, 2022
January 27, 2022

Stock Info

CNX Nifty
Face value (Rs.)
Market lot
Issue size
Rs. 3600 cr.
Public Issue
15.69 cr. shares
Market cap post IPO
29900 cr.
Equity Pre - IPO
114.2 cr.
Equity Post - IPO
130.8 cr.
Issue type
Fresh Issue

Shareholding (Pre IPO)

Source: Ace equity, StockAxis Research

Shareholding (Post IPO)

Source: Ace equity, StockAxis Research

Key strength & Strategies

Leading consumer product company in India with leadership in branded edible oil and packaged food business
Company’s branded edible oil had a Refined Oil in Consumer Packs (ROCP) market share of 18.30% as of March 31, 2021, making it India's dominant No. 1 edible oil brand. “Fortune” the company's well-known flagship brand, is India's best-selling edible oil. It has developed its leadership in the Indian edible oil market over the last two decades across a variety of product categories.

Adani Wilmar

In the fiscal year 2013, the company ventured into food products and now offers a diverse range of food items. Based on revenue growth over the last five years, it is one of India's top 5 fastest growing packaged food firms.

It has also demonstrated ability to rapidly gain market share in new categories like Rice, Soya Chunks and Wheat Flour. It has been leveraging the fortune brand to launch new products with increasing focus on value-added products and an aim to diversify revenue streams and generate high profit margins.

Adani Wilmar

Its FMCG portfolio covers soaps, handwash and sanitizers. The revenue it generated from sales of soap increased by 175.60% from Rs.15.96 Cr for the fiscal year 2020 to Rs.44.01 Cr for the fiscal year 2021. Its personal hygiene products, such as soaps, has presence in rural areas as it offers them at affordable prices in order to cater to the rural markets.

Integrated business model with well-established operational infrastructure and strong manufacturing capabilities:
Company operates an integrated manufacturing infrastructure to derive cost efficiency across different business lines. Its integrated infrastructure includes the following:

Backward and forward integration: Most of company’s crushing units are fully integrated with refineries to refine crude oil it produces inhouse. It further derives de-oiled cakes from crushing and use palm stearin derived from palm oil refining to manufacture oleochemical products, such as soap noodles, stearic acid and glycerin, and FMCG, such as soaps and handwash.

Integration of manufacturing capacities of edible oils and packaged foods at the same locations Such integrated manufacturing infrastructure has enabled AWL to share supply chain, storage facilities, distribution network and experienced manpower among different products and reduce the overall costs for processing and logistics.

Company has 22 plants in India which are strategically located across 10 states, comprising 10 crushing units and 19 refineries with an aggregate designed capacity of 8,525 MT per day and 16,285 MT per day, respectively, as of September 30, 2021. Out of the 19 refineries, ten are port-based to facilitate use of imported crude edible oil and reduce transportation costs, while the remaining are located in the hinterland in proximity to raw material production bases to reduce storage costs. In addition, as of September 30, 2021, the Company had 36 tolling units across India to cater to the excess demand and ensure its presence across different parts of the country, which produce mustard oil, rice bran oil, wheat flour, rice, pulses, sugar, soya chunks and khichdi with raw materials it provides. Its integrated business model and strong manufacturing capabilities has led to a competitive advantage, which helps solidify its market position.

Continue to launch new products and enhance customer base:
Company plans to launch new products to capture consumer trends. It has been evaluating new products in adjacent categories, based on a set of criteria, including its ability to create a differentiated offering, competitive intensity, go-to-market capability, back-end product fitment, category, scale and profitability of the new products. Its potential new products may include additional functional edible oils, cold pressed or infused oils, noodles and pasta, poha, biryani rice kit, masala oats and dalia, honey, instant dry mixes for idly, dosa, poha and khaman, Chinese, Mexican and Schezwan flavored rice, traditional savory snacks, biscuits, cookies, khari/rusks, low calorie sugar, vermicelli, cake mix, dishwash bars and floor cleaner. Company expects new products to increase its market share and further expand its customer base. In addition, it is exploring to leverage the Adani Group’s access to a wide retail customer base from its gas, electricity and airport businesses for cross-selling of its products.

Focus on increasing brand awareness:
The company will continue to invest in strengthening its brands in India. In the financial years 2019, 2020, 2021 and the six months ended September 30, 2021, its advertising expenses were Rs 135.65 Cr, Rs166.28 Cr, Rs156.37 Cr and Rs 100.43 Cr, or 0.47%, 0.56%, 0.42% and 0.41% of its revenue from operations, respectively. The company will employ celebrity endorsement, digital advertising and other brand building initiatives in its marketing campaigns to increase brand awareness.

The Company will also focus on increasing digital connect and reach by tying up with influencers and bloggers and drive on e-commerce sales to communicate with the young demographic.

Shift in consumer preferences towards packaged foods:
Driven by increasing per capita income, urbanization and the large working age population and concern of the general public over hygiene of foods in loose form, food traceability and sustainability, the demand for packaged foods in India is experiencing a rapid growth. Certain food categories, which used to be predominantly sold in loose form, are being increasingly sold in packages. However, the penetration rate of packaged foods in India remains low, which provides significant potential for growth for packaged edible oil and food products.

This shift first manifested in processed categories such as savoury snacks, biscuits, breads and buns. However, it is also becoming significant in staple categories like edible oil, wheat flour, spices and pulses given the growing concern for food safety and inclination towards hygienically packaged products. The share of branded wheat flour has grown from 3% in FY 2008 to 15% in FY 2020 and the share of branded salt has grown from 5% in FY 2007 to 88% in FY 2020 by value. This shift has been accelerated by the COVID 19 pandemic and this is expected to continue in future.

Strong brand recall across price points:
“Fortune”, AWL’s flagship brand, is the largest selling edible oil brand in India. As a renowned brand in India, it has been associated with the quality of its edible oil and food products and the health benefits they feature. Its strong brand recall has enabled it to market its products at a premium price. The Company is present in most of the packaged food categories through its “Fortune” brand. It has brands catering to various price points. “Fortune” with premium pricing and “Bullet” with value pricing – so as to optimize its customer reach, to have products for a diverse range of consumers and achieve better brand recognition.

Strong and growing e-commerce presence:
The company strives to expand its distribution network in order to further penetrate both urban and rural areas and increase sales. It will continue to increase the coverage of its retail outlets. In the meantime, the company will continue to adopt its omni-channel strategy and endeavor to extend the customer reach through e-commerce platforms. It aims to expand online reach in India from current 25 cities to 100 cities in the next few years. It also aims to have more than 40 Fortune Mart stores opened across India in the next few years. Additionally, the company intends to build separate distribution channels for its masstige brands to compete with regional brands and further penetrate regional markets

Enhancing product portfolio with focus on value-added products:
In recent years, AWL has been placing an increasing focus on value-added products, with an aim to diversify their revenue streams and generate high profit margins. The value-added products they have launched in recent years include functional edible oil products, such as rice bran health oil, fortified foods, ready-to-cook soya chunks and khichdi, and FMCG products to their portfolio in order to increase the market share.

They also intend to enhance their packaged food portfolio by introducing new value-added products, including functional foods and healthy foods, to target the young demographic. To target health conscious consumers, they aim to focus on health benefits in their development of new edible oil products.

Multiple drivers for margin Expansion:
Market share consolidation: Company is seeking continuous improvement in its market share which will enable to have better realization and premium pricing.

Integrated manufacturing facilities: The location of manufacturing facilities near manufacturing hubs helps reduce cost and achieve operational efficiency. Company plans to continue to make progress on improving the integration of its existing and upcoming manufacturing facilities.

Optimize overheads: company strives to achieve further economies of scale through manufacturing hubs producing multiple products, which will help it further optimize its overheads.

Leverage scale to improve sourcing: company’s scale will help it in the procurement of raw materials from reliable sources at competitive prices and also optimize sales by leveraging existing distribution channels.


Peer comparison

Particulars (Rs. in Crores) FY21 Revenue CAGR (FY19 - FY21) EBITDAM (%) PATM (%) RoE (%) RoCE (%) EPS PE (x)
Adani Wilmar Ltd 13.00% 3.60% 2.00% 22.10% 27.90% 6.37 36.11
Hindustan Unilever Ltd 10.00% 24.70% 17.00% 16.80% 26.10% 34.03 69.63
Britannia Industries Ltd 10.00% 19.10% 14.00% 52.50% 56.50% 77.40 46.79
Tata Consumer Products Ltd 19.00% 13.30% 7.40% 5.90% 10.50% 9.30 78.65
Dabur India Ltd 7.00% 20.90% 17.70% 22.10% 28.80% 9.58 59.05
Marico Ltd 8.00% 19.70% 14.60% 36.10% 66.70% 9.08 54.03
Nestle India Ltd 10.00% 24.50% 15.80% 143.30% 139.00% 215.98 89.73


High Dependence on raw material: The availability of raw materials, which include, unrefined palm oil, soya oil and sunflower oil, wheat, paddy and oilseeds may be adversely affected by longer than usual periods of heavy rainfall in certain regions or a drought caused by weather patterns such as the El Nino.

No long term agreement with suppliers: Company does not have long term agreements with suppliers for raw materials and any increase in the cost of, or a shortfall in the availability of, such raw materials could have an adverse impact on profitability.

Higher contribution from edible oil: A significant portion of revenue is derived from the edible oil business contributing 74.80% and 79.16% of the revenues for the five months ended Aug 31, 2021 and Fiscal 2021 respectively. Any reduction in demand or production of such products could impact their business.

Product category has very low profit margins: The company’s products are in the nature of commodities and their prices are subject to fluctuations that may affect its profitability and also due to which their margin remains very low compared to its peer.

Company Description

Adani Wilmar Limited (AWL) offers a range of staples such as wheat flour, rice, pulses and sugar. The products are offered under a diverse range of brands across a broad price spectrum and cater to different customer groups. The company is a joint venture incorporated in 1999 between the Adani Group, which is a multinational diversified business group with significant interests across transport and logistics, and energy and utility sectors, and the Wilmar Group, one of Asia’s leading agribusiness groups which was ranked seventh largest listed companies by market capitalization on the Singapore Exchange as of September 30, 2021.

In recent years, the company has been placing an increasing focus on value added products, with an aim to diversify the revenue streams and generate high profit margins. The value-added products it has launched in recent years include functional edible oil products, such as rice bran health oil, fortified foods, ready-to-cook soya chunks and khichdi, and FMCG.

As of the date the company has 22 plants in India which are strategically located across 10 states, comprising 10 crushing units and 19 refineries. Out of the 19 refineries, ten are port-based to facilitate use of imported crude edible oil and reduce transportation costs, while the remaining are located in the hinterland in proximity to raw material production bases to reduce storage costs. The company’s refinery in Mundra is the largest single location refinery in India with a designed capacity of 5,000 MT per day.

The company has the largest distribution network among all the branded edible oil companies in India.


Adani Wilmar has a comprehensive product portfolio across oil types catering to various price points. It has the widest array of oils products in their portfolio with Fortune as its well-known brand. Company has a sustained market leadership position in edible oil and is expanding its share in packaged foods and other industry essentials segment. Further, the company plans to grow through enhancing customer base and strategic acquisitions.

The Trailing Twelve Month (TTM) EPS on post-issue equity works out to Rs 6.10. At the upper price band of Rs 230, P/E works out to 37.70. which is reasonable considering Company’s historical top-line & bottom-line CAGR of 13% and 39% respectively over FY19-21. As of 24 January 2022, its listed peers such as Hindustan Unilever trades at TTM P/E of 60.82, Britannia Industries trades at TTM P/E of 53.26, Tata Consumer Products trades at TTM P/E of 80.72 and Nestle India trades at TTM P/E of 80.51.

Further, 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.

Key Information

Use of Proceeds:

  • Company is raising Rs 3,600cr through fresh issue in the price band of ₹218-230. and here is the gist of the offer:
  • Funding capital expenditure for expansion of existing manufacturing facilities and developing new manufacturing facilities – Rs 1,900cr
  • Repayment/prepayment of borrowings – Rs 1058.9cr
  • Funding strategic acquisitions and investments -Rs 450cr
  • General corporate purposes

Book running lead managers:
BNP Paribas, BofA Securities India Limited, Credit Suisse Securities (India) Private Limited, HDFC Bank Limited, ICICI Securities Limited, J.P. Morgan India Private Limited, Kotak Mahindra Capital Company Limited

Kuok Khoon Hong is the Non-Executive Chairman of the company. He has over 40 years of experience in the agribusiness industry. He is the co-founder of Wilmar International Ltd and currently he is the Chairman and Chief Executive Officer of Wilmar International Ltd. He was appointed to the Board of Directors with effect from February 27, 1999.

Angshu Mallick is the Chief Executive Officer and Managing Director of the company. He has over 35 years of experience in marketing and sales in the food industry. He has been working with the company since March 1999. He was appointed to the Board of Directors with effect from April 1, 2021.

Financial Statement

Profit & Loss Statement:- (Consolidated)

Particulars (Rs. in Crores) FY19 FY20 FY21
Revenue from Operations 28797.46 29657.04 37090.42
COGS 25065.15 25370.21 32489.75
Gross Profit 3732.31 4286.83 4600.67
Gross Margin (%) 12.96% 14.45% 12.40%
Employee Benefit Expenses 206.89 223.93 321.72
Other Expenses 2394.19 2753.37 2953.63
EBITDA 1131.24 1309.53 1325.32
EBITDA Margin (%) 3.93% 4.42% 3.57%
Depreciation 199.31 241.27 267.31
EBIT 931.92 1068.26 1058.01
EBIT Margin (%) 3.24% 3.60% 2.85%
Finance Cost 486.89 569.19 406.61
Oher Income 122.22 109.95 105.24
Profit Before Exceptional Items & Tax 567.25 609.01 756.64
Exceptional Items - - -
Profit Before Tax 567.25 609.01 756.64
Tax 212.90 205.98 103.87
Effective Tax Rate (%) 37.53% 33.82% 13.73%
Profit After Tax 354.35 403.04 652.77
PAT Margin (%) 1.23% 1.36% 1.76%
Earnings Per Share (Rs.) 3.29 4.03 6.37