Adani Wilmar down 17% in last one year and 6% in 2024 so far; is it a good time to buy?

Adani Wilmar has been in focus after the Adani Group firm shared its business updates for the first quarter (Q1FY25). The FMCG firm reported a 13 percent year-on-year growth in volumes in the June quarter. This success came despite industry challenges during the quarter, such as decreased out-of-home consumption and seasonal dips in summer demand.

The company highlighted that it is actively pursuing significant opportunities by implementing strong sales and distribution strategies in general trade. Additionally, alternate channels (e-commerce, quick commerce, modern trade) maintained their momentum with a 19 percent year-on-year volume growth in Q1. The volume of branded exports also increased by 36 percent year-on-year in Q1.

Adani Wilmar's revenue from branded products in the domestic market has consistently grown at a rate exceeding 30 percent year-on-year for the past eleven quarters. The company anticipates that strong growth in food volume will persist, as stated in its exchange filing.

Stock Price Trend

The stock has declined nearly 17 percent over the past year and about 6 percent year-to-date in 2024, delivering positive returns in 4 out of the 7 months of this calendar year.

It has been flat but in the green (up 0.6 percent) in July so far after 2 straight months of losses. It shed 6.65 percent in June following a 0.5 percent decline in May. However, it witnessed strong 11.2 percent returns in April. The month of March also witnessed a setback with the stock crashing almost 16 percent. However, the first 2 months of the year were positive for the stock, with a 7.4 percent increase in February and a 0.15 percent rise in January.

Currently trading at ₹334.20, the stock is 21 percent away from its 52-week high of ₹422.55, hit on July 26, 2023. Meanwhile, it has advanced 17 percent from its 52-week low of ₹285.85, hit on November 20, 2023.

With the stock witnessing strong fluctuations in 2024 YTD, should you still buy? Here's what technical and fundamental experts say:

Technical View

Osho Krishan, Sr. Analyst – Technical & Derivatives, Angel One

ADANI WILMAR is currently undergoing a corrective phase and is positioned below the 200 SMA on the daily chart. Despite the ongoing sell-off and underperformance, the stock has potential support in the range of 320-300. However, a breach below this support zone could disrupt the overall chart structure. On a positive note, the stock has displayed resilience between 360-400, and a sustained breakthrough above this range could signify a return to strength for the stock.

Rajesh Palviya, SVP - Technical And Derivatives Research, Axis Securities

The overall medium and long-term outlook remains weak. However, since Dec 2023, the stock continues to consolidate within 400-320 levels, indicating a sideways trend. Any upcoming decisive breakout above 400-410 levels will result in an upward breakout. On the other hand, any violation of 320-310 levels may cause a continuation of a downtrend towards 280-260 levels. The weekly and monthly strength indicator RSI has turned flat, indicating a lack of strength on short to medium-term charts. Traders are advised to follow 315 as a crucial support zone.

Gaurav Bissa, VP, InCred Equities

AWL has witnessed intense pressure which resulted in almost 70 percent fall from the top. It has been consistently forming lower highs and lower lows which is a characteristic of a downtrend. It has been witnessing time correction after forming a fresh low and till it holds above 285, the corrections might not be severe with a possibility of a trend reversal. However, it is advised to buy fresh positions on a weekly close above 370 levels where the 55ema is placed on the weekly charts. A close above this can increase the odds of trend reversal significantly which can ultimately lead to a strong upside. Existing shareholders are advised to hold their positions using 285 as a stop loss.

Fundamental View

Nuvama has retained a ‘BUY’ rating with a target price of ₹455, implying a potential upside of over 36 percent. Adani Wilmar is actively pursuing substantial opportunities with strong sales and distribution strategies in General Trade, it said.

Nuvama forecasts a strong growth trajectory with revenue and EBITDA expected to increase by 12.5 percent and 196 percent year-over-year, respectively. The overall Edible Oil segment is poised to grow 13 percent in volume and 10 percent in value year-over-year, driven by solid industry growth of 6-7 percent, particularly in branded products with double-digit volume expansion. Foods and FMCG sectors are projected to achieve robust growth of 46 percent in volume and 45 percent in value, while the Industry Essentials segment is anticipated to decline by 8 percent in volume with flat value growth. Brands like Fortune and Kohinoor are anticipated to perform admirably. Overall, gross margins are expected to expand by 375 basis points to 12.9 percent, and EBITDA margins by 165 basis points to 2.7 percent year-over-year.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.