The shares of Adani Wilmar traded lower for the eighth straight day and hit the 5% lower circuit for five consecutive trading sessions. They have slipped 34% from their 52-week high of ₹878 apiece that they had touched on 28th April 2022. This happened as investors continued to book profits.
On Tuesday’s trades, the shares got locked at ₹583.25 apiece. The stock gained 1.07% in a month but has lost 22.61% in a week. However, it is trading higher than the 50-day, 100 day and 200-day moving averages but lower than the 5-day and 20-day moving averages.
Adani Wilmar, an Adani Group company, got listed in February, this year. The issue price was ₹230 per share and it got listed on February 8th 2022. In late April when the share had reached its 52-week high, the stock gave multibagger returns of 281.74%, in less than three months.
Investors who had invested ₹1,00,000 in the shares of the company at its IPO price had holdings worth ₹ 3.8 lakhs in April.
A total of 781,497 equity shares changed hands with pending sell orders of 2.73 million shares on the NSE and BSE. The shares of Adani Wilmar are trading under the T group on the BSE and under the BE category on the NSE. This means that each trade has to result in delivery and intraday trades are not allowed.
Stock market experts said that Adani Wilmar’s shares have been put under the ASM category to prevent speculative buying on the counter, leading to a sharp downside. They added that the share price may continue to slide till it’s under surveillance as the stock was trading at a much higher price than its actual valuation.
JP Morgan
Recently, Adani Wimar acquired Kohinoor rice brand rights for India. Analysts at JP Morgan believe that this will help to consolidate the market share in the premium basmati rice segment.
The company’s net profit fell 26 per cent year-on-year (YoY) to Rs 219.2 crore on the back of higher tax expenses. However, its revenue rose 40.2% YoY to Rs 14,960.4 crore. Edible oil profits surged due to the consequences of the Russia Ukraine crisis and helped the company to get higher realizations.
“Even as we like the business from a long term perspective, post the sharp share price rally since listing (+228 per cent vs Nifty flat) driving valuations to ~70x FY24E P/E (ex-foods at ~55x P/E), we find risk-reward unattractive and downgrade rating to ‘underweight’ with new June’23 price target of Rs 525,” said analysts at JP Morgan.
Edelweiss
Adani Wilmar is looking for more downstream industry essential (IE) products that fetch higher margins. It is poised to gain market share from smaller players as they tackle inflation and supply shortages. It is stepping up its food offerings to B2B customers.
With this, we revise the target multiples in our SOTP valuation, increase FY24e EPS by 6.2%, revise our TP to Rs735 (from Rs 559) and maintain a hold, said the brokerage.
KRChoksey
The brokerage sees a 20% upside from the current level. It said that Adani Wilmar’s capabilities are supported by extensive business networks. It imports 70 per cent of its raw materials, and its market leadership has facilitated sourcing raw materials from top global suppliers. Further, Wilmar International is the largest palm oil supplier in the world and provides it with an additional competitive edge as it need not depend on third-party suppliers for sourcing palm oil.
Mehta Equities
When the shares were at ₹ 840 levels, Prashanth Tapse, Research Analyst and VP of Research at Mehta Equities advised investors to book 30% to 40% of the holding around Rs 840-850 levels. He added, “If anyone wishes to buy fresh at current levels, better to wait for buy on dip opportunity to accumulate in the long term.”
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