Adani Wilmar hits ₹1 lakh crore market cap. What's driving this stock?
3 min read . Updated: 26 Apr 2022, 10:48 AM IST
Premium- Stock market today: Adani Wilmar share price is skyrocketing due to rising demand-supply constraint in raw materials required for edible oil, believe experts
Stock market today: Another Adani company hit the ₹1 lakh crore market cap today. Adani Wilmar shares hit 5% upper circuit today in early morning deals, giving it a market cap of ₹1.04 lakh crore. In last one week, this is the second Adani group stock that has achieved this milestone. Last week, Adani Power shares had achieved this feat crossing ₹1 lakh crore market valuations. Today, Adani Power's market capital is around ₹1.10 lakh crore. Adani Wilmar share price today opened with an upside gap of nearly ₹34 per share and went on to climb to its new life-time high of ₹803.15.
According to stock market experts, Adani Wilmar share price is skyrocketing due to rising demand-supply constraint in raw materials required for edible oil. They said that soya prices have already scaled to record high and now Indonesia and Malaysia have banned palm oil export. This may put further upward pressure on edible oil prices due to supply constraints.
Market experts went on to add that big companies like Ruchi Soya and Adani Wilmar are expected to get margin benefit in case of price hikes as they maintain a buffer stock of raw materials for a sustained business operations.
Ravi Singhal, vice chairman at GCL Securities, said, "Adani Wilmar shares are surging continuously because of the rising demand-supply constraint in raw materials needed for edible oil manufacturing. Recently Soya prices have touched record high and now Indonesia and Malaysia have banned export of palm oil. This may further worsen the situation as it would lead to rise in raw material price of other edible oils as well. So, big FMCG companies like Adani Wilmar is expected to get margin benefit of rising raw material prices of edible oil as they keep a buffer stock to sustain their business operation even when there is an untoward development in the market."
But some analysts are cautious due to the sharp rise in the stock price. Santosh Meena, Head of Research, Swastika Investmart Ltd said, "The Ukraine war has shot commodity prices higher worldwide, Ukraine being the largest exporter of oil seeds like sunflower, and soybean seeds have pushed the edible oil prices. The Indonesian palm oil export ban and Malaysian export tax will further squeeze the oil supply. This whole problem has skyrocketed edible oil prices in India, benefiting edible oil companies like Adani Wilmar. The company will have windfall gains via. unsold inventory revaluation. Further, this situation will improve the overall margins for the company. Due to these factors the company has finally crossed the Rs. 1 lakh market cap level. However, we advise investors to stay cautious as the stock has moved far ahead from its fundamentals."
Suggesting positional investors to avoid any fresh position in the counter, Rohit Singre, AVP — Research at Bonanza Portfolio said, "Adani Wilmar shares have immediate support at ₹710 whereas its strong support is placed at ₹650. So, those who have this stock in their portfolio can maintain stop loss at either of these two levels, depending upon their risk appetite."
Comparing Adani Wilmar share price with Adani Wilmar IPO price band of ₹218 to ₹230, Adani Wilmar stocks have ascended to the tune of near 250 per cent from its issue price.
Rising edible oil prices have led to surge in Ruchi Soya share price as well. Ruchi Soya share price today shot up 8 per cent in early morning deals and it is currently quoting around ₹1025 per shares.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.
