Buy AWL Agri Business; target of Rs 360: ICICI Direct

ICICI Direct's research report on AWL Agri Business

AWL reported 20% YoY revenue growth due to pricing action, while volume growth was impacted by weakness in palm oil and rationalisation of rice business. Key pressures included: 1) low single-digit growth in branded edible oil (ex-palm), with palm drag leading to ~135bps share loss in value segment; 2) 21.2% YoY volume decline in Food & FMCG, impacted by G2G base and regional rice consolidation; 3) overall profitability was impacted by commodity inflation (+30% YoY). Positive points: 1) supportive policy changes (cut in import duty of crude edible oil) and normalisation of palm oil prices should lead to recovery in edible oil business; 2) branded Basmati saw double-digit growth aided by supply chain improvement, 3) Q-commerce revenue grew ~75% YoY, with alternate channels now contributing over INR 39bn (LTM) – 6% of sales (better profitability than GT).

Outlook

Our earnings estimates are largely unchanged for FY26-27E; modelling reported revenue / EBITDA CAGR of 8% / -1% over FY25-27E. Maintain BUY with an SoTPbased unchanged target price of INR 360.