Adani Wilmar is a good FMCG bet to invest at a reasonable IPO price, say analysts

• FMCG player Adani Wilmar is all set to open its ₹3,600 crore IPO on January 27.
• Analysts recommend subscribing to the IPO because of the company's strong foot in the edible oil business and future strategies to enter other food segments.
• Shares of the company are currently commanding a GMP of 25%, which is ₹50 per share from the IPO price.

If you are wondering whether to invest in the first initial public offering (IPO) of the year, Adani Wilmar, here is everything you need to know from analysts' point of view.

Fast moving consumer goods (FMCG) company Adani Wilmar, known for edible oil 'Fortune', is all set to open its initial public offering (IPO) on January 27 and will close on January 31. The IPO opens with a price band of ₹218-230.

The company’s portfolio of products spans across three categories -- edible oil, packaged food and FMCG, and industry essentials.

Further, its future growth strategy is focusing on value-added products with the launch of edible oil products, rice bran health oil, fortified foods, ready-to-cook soya chunks, khichdi and more.

Considering the company’s strong footing in edible oil business, wide distribution and future prospects, analysts recommend subscribing to the IPO.

“Adani Wilmar has strong brand recall, wide distribution, better financial track record and healthy returns on equity (ROE). Considering all the positive factors, we believe this valuation is at reasonable levels. Thus, we recommend a subscribe rating on the issue,” said Amarjeet Maurya of Angel One.

Domestic peers	Market cap as of Jan 25	Share price as of Jan 25, 11:30 a.m.
Adani Wilmar	₹29,888 crore	₹230
Hindustan Unilever	₹5.37 lakh crore	₹2,291
Dabur	₹95,747 crore	₹541
ITC	₹2.61 lakh crore	₹211
Nestle India	₹1.78 lakh crore	₹18,555
Britannia	₹84,977 crore	₹3,522
Godrej Agrovet	₹9,907 crore	₹511
Marico	₹61,200 crore	₹472
Emami	₹21,101 crore	₹474
Godrej Consumer Products	₹89,624 crore	₹874

“Over FY21-FY24, we expect Adani Wilmar to grow its revenues at a robust CAGR [compound annual growth rate] of 16.7% to ₹58,959 crore spearheaded by the FMCG vertical, which is set to grow at a CAGR 31.5% to reach ₹4,338 crore,” said analysts at Ventura Securities.

The company aims to expand its online reach from 20 cities to 100 cities in the next few years and have more than 40 Fortune Mart stores opened across India in the next few years. Fortune Mart is its franchise store where all products of Adani Wilmar are available.
In an interview with Business Insider, the company’s chief executive Angshu Mallick said that 60% of the market share is with small players, local players, and regional oil players. “Slowly, we see that there is some difficulty for such small players to compete with big players because of the nature of business, risk management policies, price hikes and all that,” said Mallick.

To increase its market share, the Adani Group company is looking to acquire small regional companies with a corpus of ₹450 crore.

Not only is the company interested in buying strong edible oil brands, but also firms who are into ready-to-cook, ready-to-eat or organic food segments, which is gaining a lot of traction, explained Mallick.

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