Adani Wilmar IPO Review: Another company from the Adani Group to get listed on the Indian stock exchanges! Adani Wilmar Ltd. Initial Public Offer (IPO) will open for subscription on Thursday, January 27, 2022, and close on January 31, 2022.
The company is looking to raise Rs 3,600.00 Crores through the IPO. In this article, we take a closer look at the Adani Wilmar Limited IPO Review 2022 and its possible future prospects. Keep Reading to find out!
Table of Contents
Adani Wilmar IPO Review – About the Company
Adani Wilmar is a joint venture between Adani Group, which is a multinational diversified business group with significant interests across transport and logistics, and Wilmar Group, one of Asia’s leading agribusiness groups. It is one of the largest FMCG food companies in India to offer most of the essential kitchen consumers, including edible oil, wheat flour, rice, pulses, and sugar.
They have 22 plants that are strategically located across 10 states in India, comprising 10 crushing units and 18 refineries. In addition to that, they have 28 leased tolling units which provide additional manufacturing capacities.
The company was India’s largest importer of crude edible oil as of March 2020 which provided them with bargaining power to source better quality raw materials in favorable terms. Their product portfolio includes:
Edible Oil
They have an 18.3% market share in the Refined Oil in Consumer Packs (“ROCP”) making it the number one edible oil brand in India. “Fortune”, their flagship brand, is the largest selling edible oil brand in India.
Apart from that, they offer a comprehensive portfolio of edible oil products, including soyabean oil, palm oil, sunflower oil, rice bran oil, mustard oil, groundnut oil, cottonseed oil, blended oil, vanaspati, specialty fats, and a range of functional edible oil products.
The Major Competitors in the Segment are
Ruchi Soya Industries Limited, Kaleesuwari Refinery Private Limited, and Emami Agrotech Limited.
Packaged Food and FMCG
In 2021, the market share of their packaged wheat flour and basmati rice under the Fortune brand was approximately 3.4% and 6.6% by volume, respectively. They also ranked second and third, respectively, in India.
They offer a wide array of packaged foods, including packaged wheat flour, rice, pulses, besan, sugar, soya chunks, and ready-to-cook khichdi. FMCGs include soaps, handwash, and sanitizers.
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The Major Competitors in the Segment are
Ruchi Soya Industries Limited, ITC Limited, Daawat (LT Foods Limited), India Gate (KRBL Limited), and Kohinoor (McCormmick & Co. Inc.)
Also read: Adani Wilmar raises Rs 940 cr from anchor investors ahead of IPO
Industry Essentials
Adani Wilmar’s diverse range of industry essentials includes oleochemicals, castor oil, and its derivatives and de-oiled cakes. They are one of the largest basic oleochemical manufacturers in India in terms of revenue, and the largest manufacturer of stearic acid and glycerine in India with a market share of 32% and 23%, respectively. They were the largest exporter of castor oil and one of the largest exporters of oleochemicals in India as of March 2020.
The Major Competitors in the Segment are
VVF Limited, Godrej Industries Limited, Jocil Limited, Mohini Organics Private Limited, Fairchem Chemicals Limited, and Gokul Agro Resources Limited.
Financial Snapshot of Adani Wilmar
(Source: DRHP of Adani Wilmar)
Adani Wilmar IPO Review – Industry Overview
The Indian packaged food retail market is estimated at Rs 6,00,000 Cr in FY 2020. It contributes only 15% to the total food and grocery retail market which is estimated at Rs 39,45,000 Cr in FY 2020. India is a large importer of edible oil.
Indian imports contribute 46% to the total export of crude palm oil. Similarly, 19% of crude sunflower oil, 30% of crude soybean oil, and 8.6% of palm oil and its fractions are imported by India. The category is expected to gain a market share of 17% by FY 2025.
The edible oil retail market is estimated to be approx Rs 1,79,500Cr in FY 2020 and is expected to grow at a CAGR of 6% in the coming 5 years. In addition to that, It is estimated that close to 75% of the total edible oil available in terms of volume is retailed as a branded product.
India is the single largest producer of castor seeds and accounts for 85% of the total global castor oil-seeds production, followed by China and Brazil. The castor oil production in India is estimated to grow at a CAGR of 7% in the coming 5 years.
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Strengths of the Company
- One of the few large FMCG food companies in India to offer most of the essential kitchen commodities for Indian consumers.
- The company had long-standing extensive business networks making their raw material sourcing cheaper.
- They use an integrated business model with a well-established operational infrastructure and strong in-house manufacturing capabilities.
- Stong PAN-India presence with 5,566 distributors, catering to over 1.6 million retail outlets, representing approximately 35% of the retail outlets in India.
- The company has taken various environmental and social sustainability measures. For instance, 97% of our packing materials are recyclable. They have also e implemented solar power at five of their plants.
Weaknesses of the Company
- A significant portion of their revenue is dependent on the edible oil business segment. Any reduction in demand or in production could have an adverse effect on the company.
- Being an edible oil and food and FMCG company, the business is sensitive to weather conditions, including extremes such as drought, floods, and natural disasters.
- The company is dependent on high-quality raw materials. Any change in price or disruption in the supply chain will affect the business.
- Any changes in the prices of commodities, domestic or globally, might have an impact on the earnings of the company.
- The company is susceptible to various international laws and regulations such as import and export policies.
Adani Wilmar IPO Review – Grey Market Information
Shares of Adani Wilmar traded at a 23.91 % premium on January 24th. The shares were trading at Rs 285. This gives a premium of Rs 55 over the cap price of Rs 230.
Adani Wilmar IPO Review – Key IPO Information
Promoters: Adani Enterprises Limited, Adani Commodities LLP, and Lence Pte Ltd.
Global Co-ordinators Book Running Lead Managers: Kotak Mahindra Capital Company Limited, J.P. Morgan India Private Limited, BofA Securities India Limited, and Credit Suisse Securities (India) Private Limited.
Book Running Lead Managers: ICICI Securities Limited, HDFC Bank Limited, and BNP Paribas.
Registrar to the issue: Link Intime India Private Limited.
| Particulars | Details |
|---|---|
| IPO Size | Rs 3600.00 Cr |
| Fresh Issue | Rs 3600.00 Cr |
| Offer for Sale (OFS) | 0 |
| Opening date | January 27, 2022 |
| Closing date | January 31, 2022 |
| Face Value | ₹1 per equity share |
| Price Band | ₹218 to ₹230 per equity share |
| Lot Size | 65 Shares |
| Minimum Lot Size | 1 |
| Maximum Lot Size | 13 |
| Listing Date | February 8, 2022 |
The Objective of the Issue
The net proceeds from the issue will be used for:
- Funding capital expenditure for expansion of our existing manufacturing facilities and developing new manufacturing facilities (“Capital Expenditure”)
- Repayment/prepayment of our borrowings
- Funding strategic acquisitions and investments
- General corporate purposes
In Closing
In this article, we covered the Adani Wilmar Limited IPO Review 2022. The Initial Public Offering opens on January 27, 2022, and closes on January 31, 2022. For investors, it can be a good opportunity to look into the company and apply for the IPO after analyzing the strengths and weaknesses of the company. Are you applying for the IPO? Let us know in the comments below. Happy Investing!
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