Adani Wilmar shares down 7% a day after Adani's exit from FMCG business

So far in 2024, Adani Wilmar shares are lower by 17%.

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Shares of Adani Wilmar fell nearly 7% in early trade on December 31, a day after the Adani Enterprises announced plan to exit the JV with Singapore's Wilmar International, offloading its entire 44% stake in the company as part of a $2 billion deal. The price of up to Rs 305 at which Adani Group is selling its stake 31% stake to Wilmar International is a 7% discount to Monday's closing price.

Investec in its latest note on Adani Wilmar has assigned a Hold on the stock, with a target price of Rs 397 per share, stating that 'single ownership' will drive strategic simplification and is a positive for the company. So far in 2024, Adani Wilmar shares are lower by 17%. JPMorgan's note has ascribed an Underweight with a target of Rs 320 per share on AWL, adding that the company has significant sourcing, supply chain and scale advantages.

Shares of Adani Enterprises were down over 2% in trade at 10:15am. The company formally informed exchanges that its wholly-owned subsidiary Adani Commodities LLP and Lence, a wholly-owned subsidiary of Wilmar International have signed the agreement for the traction announced on December 30.

Read More: Adani Enterprises to exit Wilmar JV in $2 billion deal

This stake sale has come at a time when the group's founder and promoter Gautam Adani is facing legal challenges in the US, after federal prosecutors alleged a bribery scheme to win contracts in India. Adani Enterprises will hope that the transaction addresses concerns around liquidity, as this is the first major transaction since the DoJ indictment in November.

Adani Enterprises will be raising over $2 billion through the overall transaction, which involves two steps - an OFS and stake sale to Wilmar International subsidiary. The transaction is expected to be completed by March 2025, and will accrue cash for further growth. Adani Enterprises has been the flagship incubator company, focusing on ventures like green hydrogen, data centre, digital initiative, and consumer services under the airport business.

"AEL will continue to invest in infrastructure sectors which will further strengthen AEL’s position as India’s largest listed incubator of platforms playing the key macro themes underpinning India’s growth story," Adani Enterprises had said in the statement announcing the deal.

Prior to this transaction, Adani Enterprises secured $500 million in October. Additionally, other group companies such as Adani Energy Solutions, Adani Green Energy, and Ambuja Cement collectively raised approximately $4.5 billion in recent months.

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