Accumulate Adani Wilmar; target of Rs 297: KR Choksey

KR Choksey's research report on Adani Wilmar

For Q3FY25, the revenue increased 31.4% YoY (+16.6% QoQ) to INR 168,593 Mn, which is in line with our estimate of -0.9%. EBITDA increased 56.9.1% YoY (+28.6% QoQ) to INR 7,916 Mn, which beat our estimate. EBITDA margin improved to 76bps YoY (+44 bps QoQ) to 4.7%, outperforming our estimate by 138bps. Net profit increased 104.6% YoY (+32.1% QoQ) to INR 4,109 Mn, beating our estimate mainly due to positive operating leverage. We maintain our FY26E/FY27E EPS estimates, anticipating competitive pressures in the food business and margin normalization in edible oils post the current commodity cycle, which may impact profitability. We expect Revenue/EBITDA/PAT to grow at a CAGR of 9.0%/8.7%/20.0% over FY23-FY27E. The stock is currently trading at 31.4x/27.5x our estimated EPS for FY26E/FY27E, respectively. We have rolled over our valuation to FY27E and applied the P/E multiple of 31x (from 45x on FY26E EPS), reflecting the potential loss of premium following Adani Enterprises' exit.

Outlook

Based on FY27E EPS of INR 9.5 (unchanged), we arrived at a target price of INR 297 (previously: INR 373). Consequently, we maintain our ‘ACCUMULATE’ rating on Adani Wilmar Ltd.