Shares of Adani Wilmar fell 5 per cent today amid a report that Indonesia could restart shipments of palm oil whose export was banned to contain the soaring local prices of cooking oil. The ban on palm oil exports by Indonesia pushed the prices of edible oils higher, which were already on the boil due to the ongoing Russia-Ukraine war.
Indonesia had lifted the ban on export of palm oil on May 23 but companies were facing regulatory hurdles that were slowing the process of getting their shipments out.
Shares of Adani Wilmar, which had surged due to the palm oil export ban, are now heading south for the last two sessions.
Adani Wilmar stock fell 5 per cent today amid volatile sentiment in the broader indices. The share touched an intraday low of Rs 661, losing 5 per cent today on BSE. At 2:21 pm, the stock was trading 1.77 per cent lower at Rs 684 on BSE. The stock opened with a loss of 3.78 per cent today at Rs 670 today.
Market cap of the firm fell to Rs 88,898 crore.
A total of 1.28 lakh shares of the firm changed hands amounting to a turnover of Rs 8.67 crore on BSE. The stock has lost 12.85 per cent in a month but lost 2.84 per cent in a week.
Adani Wilmar stock is trading higher than 20-day, 50-day, 100-day and 200-day moving averages but lower than 5-day moving averages.
Also Read: Indonesia seeks to issue first palm oil export permits since ban
According to a Reuters report, the delays in restarting shipments has meant abundant palm fruit supplies, and low prices for Indonesian farmers, hundreds of which protested earlier this month when palm fruit prices fell 70 per cent.
In mid-May, ICICI Securities initiated coverage on the Adani Wilmar stock with a ‘Hold’ rating and a SoTP-based target price of Rs 550. The brokerage expects the edible oil business to witness a 10 per cent volume growth CAGR over FY22-24E (including the impact of the Bangladesh acquisition).
“In FY23E, we expect volume growth of 11 per cent with some benefit of full-year consolidation of Bangladesh – we note Bangladesh operations are mainly in the edible oil segment. For FY24E, we expect volume growth of 9.0 per cent in the edible oil business,” it said.
ICICI Securities said strong competitive advantages (price-laddering, oil segments, scale, market intelligence (courtesy Wilmar)) in edible oil will provide Adani Wilmer with an edge over the competition.
On May 2, Adani Wilmar reported a 26 per cent fall in net profit at Rs 234.3 crore for the quarter ended March 31, 2022 against a net profit of Rs 315 crore in the year-ago period. However, revenue from operations climbed 40 per cent YoY to Rs 14,960.4 crore in Q4 against Rs 10,672 crore in the corresponding quarter of last fiscal.
Adani Wilmar Ltd is a joint venture between Adani Group and Wilmar Group of Singapore. It is engaged in the manufacturing of edible oil, wheat flour, rice, pulses, and sugar. The company also owns the popular brand Fortune, which is the largest selling edible oil brand in India.
Meanwhile, shares of Ruchi Soya too fell 2.32 per cent to Rs 1085.05 in the afternoon session. The stock has been falling for the last two sessions. The firm is also a leading player in palm oil processing in India.
Palm oil is the world’s most widely used vegetable oil and is used in the manufacture of many products including biscuits, margarine, laundry detergents and chocolate. India sources 45 per cent of its annual palm oil needs from Indonesia.
