Jefferies began coverage on Adani Wilmar Ltd. with 'buy' rating and a one-year forward price target of Rs 370 per share, which implied 51% potential upside. The brokerage initiated coverage noticing the fast-moving consumer goods company's attractive valuation.
Jefferies expects that Adani Wilmar will deliver like-for-like 20% compound annual growth rate in earning per share over the period of financial years 2024 to 2027.
The company's volume has grown by 8% CAGR over financial years 2015-25, led by market share gains in foods and FMCG segment, as per the brokerage. The firm is better positioned to deliver double-digit volume CAGR in oils and foods compared to peers, Jefferies said, adding that it also expects the revenue growth to be higher.
Adani Wilmar, a joint venture between Wilmar and Adani Group, has emerged as one of India's leading branded staple franchise with $7-billion revenue, Jefferies noted.
Meanwhile, Adani Group is set to exit the JV by selling its stake. After the sale, the company's name will change to 'AWL Agri Business'. Jefferies expects no impact on operations due to the transaction.
However, the key risks for Adani Wilmar are commodity price volatility, government regulation, and losses in Bangladesh business, it noted.
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