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Adani Wilmar is Asia’s Best Performing IPO

Adani Wilmar share price: Those who hold this counter and have high risk appetite can further hold the stock for next possible target of  ₹400 to  ₹410 levels, say experts. Photo: Courtesy Adani Wilmar websitePremium
Adani Wilmar share price: Those who hold this counter and have high risk appetite can further hold the stock for next possible target of 400 to 410 levels, say experts. Photo: Courtesy Adani Wilmar website

Adani Wilmar, a joint venture between Gautam Adani's company and Singapore's Wilmar International Ltd., produces Fortune brand cooking oils, wheat flour, rice, pulses, sugar, and other food products.

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While most entrants are trading under water, Adani Wilmar Ltd. has nearly tripled since its debut. The firm's shares, which are a joint venture between Gautam Adani's company and Singapore's Wilmar International Ltd., have outpaced 121 Asian initial public offerings worth more than $100 million in 2022. As a result of rising interest rates and the conflict in Ukraine, nearly two-thirds of new listings in the region are in the red.

Fortune brand cooking oils, wheat flour, rice, pulses, sugar, and other food goods are produced by Adani Wilmar. Part of the $486 million investment will be used to expand facilities, repay loans, and make strategic acquisitions, according to the company.

Other Adani-related stocks have also performed strongly. The S&P BSE 500 index's top performer in 2022 is Adani Power Ltd., which is up more than 200 percent. Adani Green Energy Ltd. is the fifth best performer year-to-date, despite the fact that it has no analyst coverage.

The company is expected to “continue to gain market share on account of strong distribution network, diversified product portfolio, market leadership in key categories, focus on rural market, new product launches and strong parentage," Vikrant Kashyap, an analyst at KR Choksey, told Bloomberg.

Gautam Adani, the world's sixth richest man, has increased his fortune by about $30 billion in 2022, more than any other billionaire. His net worth of $106 billion is less than half that of Tesla Inc. co-founder Elon Musk, but it is $10 billion higher than that of Ambani. While both would prefer markets to compensate them for writing India's renewable energy future, what's ticking for them right now is all the polluting stuff that's in short supply: coal, palm oil, gasoline, and construction materials. Investors prefer Adani simply because he is the more daring of the two.

According to Bloomberg News, Adani has spent $17 billion on 32 acquisitions in the last year and shows no signs of slowing down, despite the fact that his listed companies' combined net debt is nearly $20 billion, or more than four times annual earnings before interest, taxes, depreciation, and amortisation (EBITDA). In a tightening global interest-rate cycle, that's a lot of leverage to carry.

The strong performance bodes well for Adani, one of Asia’s busiest dealmakers, who’s expanding his reach after years of focusing on coal and infrastructure-related plays. The tycoon’s move to diversify into new areas like data centres and digital services has paid off, after he capped a run of some 32 acquisitions in the past year.

The JV, which paid off debt with funds from the IPO, gets “significant benefit" from its parents, Kashyap wrote in a note this month, which recommended the stock to accumulate. Expected acquisitions will lead to a gain in market share, he added. The firm recently announced the purchase of several brands, including the Kohinoor cooking brand for the India region.

Meanwhile, Adani Wilmar's stock has plummeted because the Central government decided to remove yearly imports of crude soybean and sunflower oil from customs duty and agri cess until March 2024. On May 26, the Adani Wilmar share price opened down and went on to set an intraday low of 631.65 per share, marking the third session in a row that it has closed lower. Stock market specialists believe that growing input costs and lower edible oil prices in the domestic market will continue to influence edible oil maker stocks, and that new holdings should be avoided at the counter.

(With agency inputs)

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