Q. Why the shares of Adani Wilmar Ltd (Rs.345) didn't perform too well in the recent past and how its future look?

Ans. I feel it fell primarily due to a couple of reasons, apart from other factors.

💢Adani Commodities and Lence Pte had to divest a part of their shareholding between December 26 to January 31, 2024. The two promoter entities of Adani Wilmar planned to sell up to 1.6 crore shares or 1.24% stake in the company as part of the programme to meet the minimum public shareholding norm prescribed by the SEBI. When such huge supplies come in the market all of a sudden, shares of the company are likely to fall. 

💢The company was not doing well till the September quarter due to sudden fall in inventory valuations. 

Now, the 1st episode is over, while the edible oil prices have stabilized in the international markets. 

However, according to the Economic Times, the companies like Adani Wilmar Ltd (Rs.343.50), Emami Agrotech and Sunvin Group said while disruption of Soyabean oil supplies, from Brazil and Argentina is driving up prices, mustard oil prices have risen as NAFED and HAFED have purchased large quantities of mustard seeds.

Also, the company has turned around in the last quarter and future looks bright due to NDA government coming at the center with which it has an umbilical cord relationship.

Also, due to ensuring Festival Season, the demand for edible oil and other FMCG products are set to increase. 

Incidentally, valuing a company solely by its P/E ratio is incorrect, particularly for a growing company like Adani Wilmar, which has a vast reach and numerous factories. Photo: Equity Bulls.

Buy at the CMP of Rs.345, T: Rs.700+, SL: Rs.311.