Jefferies Cuts Target Price On This FMCG Company Looking To Diversify Its Brand

Shares of AWL Agri Business Ltd. are in focus on Wednesday's trade after Jefferies cut its target price in the wake of the company's ongoing strategic reset from being an edible oil-led business to a diversified kitchen essentials platforms.

Jefferies sees AWL, a subsidiary of Wilmar International, as transitioning across three complementary business engines. Foods is positioned as the growth driver, edible oils as the cash and returns generator while industry essentials have been labelled as the optionality play.

AWL's flagship brand Fortune is among India's largest consumer brands with sales exceeding Rs 250 crore. Jefferies noted that the company is already the market leader in edible oils with approximately 18% market share.

The brokerage further noted that recent restructuring in the foods business should drive brand-led and profitable long-term growth, whereas the edible oil segment generates stable free cash flow that can fund the Foods expansion without putting much stress on the balance sheet.

The brokerage expects 7-8% revenue and Ebitda CAGR over FY26-29 from the edible oils segment and 16% revenue and Ebitda CAGR from Foods over the same period.

Keeping that in mind, Jefferies has cut target price of AWL Agri from Rs 340 to Rs 260, following a reduction in EPS estimates of 15-17% due to raw material volatility and the reset in the Foods business.

Despite the cut, Jefferies maintains its 'buy' stance, noting that AWL trades at 23x FY27 estimate earnings, which accounts for a 50% discount to its FMCG peers. Such a valuation gap is unjustified given the company's improving earnings quality, strong RoCE from edible oils and long runway for brand-led Foods growth.

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