Adani Wilmar Q1 Results: Volume Rises 25%, Revenue At Rs 12,928 Crore

Adani Wilmar Ltd.'s first-quarter volume grew steadily on the back of sustained demand for its food and edible oil products. However, its revenue slipped, reflecting the steep decline in edible oil prices.

The consolidated revenue of the owner of the 'Fortune' brand fell 12.2% over the previous year to Rs 12,928.08 crore in the quarter-ended June, according to an exchange filing. That compares with the Rs 14,990.6 crore consensus estimate of analysts tracked by Bloomberg.

Volume rose 25% with broad-based growth across all segments.

Adani Wilmar Q1 FY24 Highlights (Consolidated, YoY)

• Net loss of Rs 79 crore versus a net profit of Rs 194 crore, as against a Bloomberg estimate of Rs 211.65 crore.

• Ebitda down 70.6% to Rs 130.4 crore, as compared with an estimate of Rs 496.55 crore.

• Margin stood at 1% versus 3%. Analysts had forecast it at 3.3%.

• The food and FMCG business recorded a revenue growth of 28% to Rs 1,097 crore. Volume rose 21% to 0.23 million metric tonne.

• Volume in its mainstay edible oil business rose 27% to 0.89 million metric tonne, while revenue slipped 14% to Rs 9,845 crore.

• Industrial essentials grew 21% in volume terms to 0.36 million metric tonne. Revenue, however, fell 16% to Rs 1,986 crore.

“We have regained the momentum in our edible oil business with the decline in the edible oil prices," said Angshu Mallick, managing director and chief executive officer at Adani Wilmar.

The company, he said, is strengthening 'King's' — the third-best selling brand of soyabean oil in India—and positioning it across its entire range of packaged oils and foods to gain market share from regional brands.

The company is also investing in the value-added blended oils under the Xpert brand to tap the opportunity in this segment, Mallick said.

Both urban and rural areas have witnessed strong demand, it said.

Adani Wilmar, with a market share of 19.5% in the edible oil segment, sees potential to consolidate market share, since more than half of the share is held by regional brands. Its share is also 1.5 times of its immediate peer.

High-cost inventory in an environment of falling edible oil prices, higher finance costs on the back of a hike in U.S. Fed rates, continued ban on wheat exports and disaligned hedges exerted pressure on profitability, it said.

"Prices on commodity exchanges, which are used by company to hedge price risk didn’t move in tandem with physical prices. As a result, hedges were in loss without corresponding gain in physical trade," Adani Wilmar said.

Disproportionate allocation of tariff rate quota has also resulted in higher material cost for Adani Wilmar as compared with other players in April, impacting profitability. Profit was also impacted because its wholly owned subsidiary in Bangladesh made losses of Rs 21 crore during the quarter, due to price caps by the government on edible oils, local currency-related issues, as well as unavailability of counter-party for forex hedging.

Distribution expansion, gaining share in under-indexed markets and margin improvement will be the key priorities, the company said. The consumer goods business of Adani Group said it sees opportunity in exports, hotels, restaurants and catering as well as the institutional segment and is working on plans to exploit the opportunities.

During the quarter, Adani Wilmar expanded its direct reach by two times to six lakh outlets. It has also increased its rural towns coverage by 6.7 times to over 21,700 towns.

Adani Wilmar has so far utilised 49% of the IPO proceeds of Rs 3,472 crore towards loan repayment, various IPO projects and acquisitions. As for capex, the company has utilised Rs 509 crore of the Rs 1,900-crore fund.

Shares of Adani Wilmar fell 0.3% after the results were declared, as compared with a 1.07% decline in the benchmark Nifty50.

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