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Adani Wilmar Ltd's December quarter (Q3FY22) results, its first since listing, were not bad to start with. Shares of the fast-moving consumer goods (FMCG) company are now around 67% above their issue price of ₹230 apiece.
In Q3, revenue from operations grew by 41% year-on-year (y-o-y) and by 6% sequentially to Rs14,379 crore owing to growth across all the three segments — edible oil, food & FMCG, and industry essentials. Total sales volume rose by 6% y-o-y to 1.26 million tonne.
The company’s mainstay edible oil segment forms approximately 84% of total revenue. The segment’s market share increased from 18% in Q3FY21 to 18.9% in Q3FY22. Consequently, volumes rose by 9% y-o-y. Note that, 30% of the edible oil sales comes from rural markets. With the rural sector not in very good shape at the moment, investors could closely track how the demand plays out in the segment.
Meanwhile, the second largest segment in terms of revenue – industry essentials saw volume drop of 19% y-o-y, although revenues rose by 41%. The relatively newer vertical – food & FMCG - reported a 36% increase in volumes, reflecting its growing presence. The market share in wheat flour and rice increased by 140 basis points (bps) and 560bps y-o-y. One basis point is one-hundredth of a point. Further, new product launches in this segment will help the overall margins in the coming years.
It is worth noting that despite rising commodity pressures, Adani Wilmar’s Ebitda margin reported marginal y-o-y and sequential increase of 50bps and 30bps, respectively. Ebitda is earnings before interest, tax, depreciation and amortization.
The company continues to expand its distribution network through physical and digital means. Ten new Fortune mart stores were successfully launched in 9MFY22. This has increased the total count to 18 stores spread across India. The company hopes to open 100 additional outlets within the next one year. Also, the online portal – Fortune Online is live in 25 cities currently. The business-to-business app for kiranas --Fortune Business -- is expected to be scaled up in a phased manner. Currently, it is live in 16 cities.
Further, the growth in the food and FMCG segment will play a key role as it can take the overall margins higher. Also, a healthy rabi crop season will lead to increased rural demand which will boost volumes.
For now, though, the stock’s performance since listing suggests investors are capturing the optimism adequately.
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