25-Jan-2220

ADANI
Equitas Small WILMAR
Finance BankLIMITED
IPO NOTE IPO NOTE
 OVERVIEW
Adani Wilmar is a joint venture incorporated in 1999 between the Adani Group, which is a multinational diversified business group and
Wilmar Group, one of Asia’s leading agribusiness groups. It is one of the few large FMCG food companies in India to offer a wide array of
packaged foods, including edible oil, wheat flour, rice, pulses, besan, soya chunks, ready-to-cook khichdi and sugar, under a diverse range of
brands to cater to various price points, including Fortune, its flagship brand. It also has a number of brands catering to masses, including
Bullet, King’s, Aadhar, Raag, Alpha, Jubilee, Avsar, Golden Chef and Fryola.

FINANCIAL HIGHLIGHTS ISSUE DETAILS

Sep Issue Date 27th Jan’21-31st Jan’21
FY19 FY20 FY21
2021*
Revenue from Operations 28,797 29,657 37,090 24,875 Price Band ₹218-₹230

EBITDA 1,253 1,420 1,431 890

Bid Lot 65 Shares
Net Profit 376 461 728 357
₹ crore
* For the six months ended
Issue Size ₹3,600 cr
ISSUE SIZE No. of Shares (Post Issue) 130.9 cr
Fresh Issue
₹3,600 cr Post-Issue Implied Market Cap* ₹29,900 cr
Total
₹3,600 cr Offer For Sale
P/E Ratio
41.1x
(FY21)*
Nil * At upper price band
 ABOUT THE COMPANY
Its portfolio of products spans across three categories:
REVENUE FROM PRODUCTS BREAKUP
• Edible oil products: Includes soyabean oil, palm oil, sunflower oil, (FY21)
rice bran oil, mustard oil, groundnut oil, cottonseed oil, blended
oil, vanaspati, specialty fats and a range of functional edible oil Total: ₹37,115.6 cr
products with distinctive health benefits. It also offers various 5%
specialty fats, including (i) industrial margarine, bakery shortening
and vanaspati, (ii) lauric fats as substitutes for milk fat and cocoa 13%
butter substitutes, and (iii) bulk packaging of frying oil.

• Packaged foods and FMCG: Includes packaged wheat flour, rice,

pulses, besan, sugar, soya chunks and ready-to-cook khichdi. It also
offers FMCG, including soaps, handwash and sanitizers.

• Industry essentials: It also offers a diverse range of industry

essentials, including oleochemicals, castor oil and its derivatives
and de-oiled cakes.
82%
It sources raw materials from global suppliers, such as Cargill
International SA, Louis Dreyfus Company Suisse S.A, AAA Oils & Fats
Pte. Ltd., Cofco International Limited and Viterra B.V. It was India’s
largest importer of crude edible oil as of 31st March 2021. Edible Oil Industry Essentials Packaged Foods and FMCG
 ABOUT THE COMPANY
• It has 22 plants in India which are strategically located across 10 states, comprising 10 crushing units and 19 refineries. Out of the 19
refineries, ten are port-based to facilitate use of imported crude edible oil and reduce transportation costs, while the remaining are
typically located in the hinterland in proximity to raw material production bases to reduce storage costs.

• Its refinery in Mundra is the largest single location refinery in India with a designed capacity of 5,000 MT per day (Source: Technopak
Report). In addition to the 22 plants it owns, it also used 36 leased tolling units in India as of 30th September 2021, which provided it
with additional manufacturing capacities.

• It had an average fixed asset turnover ratio of 8.55x for FY19-21.

CAPACITY UTILIZATION ACROSS MANUFACTURING FACILITIES (%)

70
64 65
61 61
55
51
48
44 Crushing
40 39
Refining
33
Packaged Foods
23 25
20 22 Oleochemicals

2019 2020 2021 H1 FY22

 SECTOR OUTLOOK
• The edible oil retail market is estimated to be ~₹1,79,500 crore in FY20 and is expected to grow at a CAGR of 6% in the coming 5
years. It has been growing steadily at a CAGR of 6% in the last five years. The share of unbranded play is consistently dropping and is
estimated to shrink to ~10% by FY25.

• The branded edible oil market is estimated to be around ₹1,56,000 crore and is expected to grow faster than the overall category
gaining a share of close to 90% of the total market in terms of value in the coming five years. It is estimated that close to 75% of the
total edible oil available in terms of volume is retailed as a branded product. As of 31st March 2021, the Refined Oil in Consumer
Packs (ROCP) market share of company’s branded edible oil was 18.3%. (Source: Nielsen Retail Index)

OIL MARKET IN INDIA

EDIBLE OIL MARKET IN INDIA
BRANDED EDIBLE OIL MARKET IN INDIA
KEY BRANDS
 COMPETITIVE LANDSCAPE

• Revenue: • Revenue: • Revenue: • Revenue:

PATANJALI

RUCHI SOYA

LIMITED
ADANI WILMAR
EMAMI AGROTECH

₹12,692 cr ₹9,089 cr ₹13,118 cr ₹29,767 cr

• EBITDA: ₹815 cr • EBITDA: ₹1,004 cr • EBITDA: ₹401 cr • EBITDA: ₹1,419 cr

• PAT Margin: 2.8% • PAT Margin: 11.1% • PAT Margin: 60.3% • PAT Margin: 4.8%

• Fixed Asset • Fixed Asset • Fixed Asset • Fixed Asset

Turnover: 9.9x Turnover: 6.5x Turnover: 3.7x Turnover: 7.9x

• Debt to Equity: • Debt to Equity: 1.6x • Debt to Equity: 1.3x • Debt to Equity: 3.8x
13.7x
• Market Share*: - • Market Share*: 8% • Market Share*: 17%
• Market Share*: 6%

*Branded Edible Oil

Figures are for FY20
 PROMOTER BACKGROUND AND SHAREHOLDING
The promoter of the company include: Shareholding Pre IPO Post IPO
• Adani Enterprises Limited Promoter 100% 87.9%
• Adani Commodities LLP (50%) Public 0% 12.1%
• Lence Pte Limited (50%) Total 100% 100%
Adani Enterprises Limited is engaged in the business across
several business sectors including power, transport and logistics,
defence and aerospace and infrastructure. Gautam Adani and
Rajesh Adani are the promoters of AEL. Allocation of offer Share in Issue % of Issue
(₹ crore)
Adani Commodities LLP is engaged in the business of
manufacturing, trading, dealing, exports of all kinds of articles, QIB 1,566 50%
goods, commodities, merchandise for domestic, commercial, NIB 470 15%
industrial, agriculture and defence purpose/use in India or
elsewhere. Retail 1,097 35%
Lence Pte Limited is engaged in the activities of an investment Employees 107 -
holding company and trading in edible oils and palm-related Shareholders 360 -
products. Wilmar International Limited holds 100% of the share
capital of LPL. Total 3,600 100%
 OBJECTS OF THE OFFER
Company proposes to utilise the net proceeds towards funding of the following objects:

• Funding capital expenditure for expansion of existing manufacturing facilities and developing new manufacturing facilities
• Repayment/prepayment of borrowings
• Funding strategic acquisitions and investments
• General corporate purposes

EXPECTED DEPLOYMENT OF NET PROCEEDS

Particulars Amount Estimated utilization of Net Proceeds
(₹ crore)
FY22 FY23 FY24 FY25

Capital Expenditure 1,900 - 700 800 400

Repayment/prepayment of borrowings 1,059 933 126 - -

Funding strategic acquisitions and investments 450 100 350 - -

General corporate purposes

To be determined
To be determined
 RISK FACTORS
• As of 30th September 2021, the company’s total outstanding borrowings stood at ₹9,235.3 crore. Further, as of 15th January 2022,
the same outstanding borrowings (on a standalone basis) was ₹10,837.4 crore.

• The company is dependent on the supply of large amounts of raw materials, such as unrefined palm oil, soyabean oil and
sunflower oil, wheat, paddy and oilseeds. Predominantly, unrefined soybean oil is imported from Argentina and Brazil, unrefined
sunflower oil from Ukraine and Russia, and palm oil from Indonesia and Malaysia. Unfavourable local and global weather patterns
may have an adverse effect on the availability of raw materials. In addition, it does not have long term agreements with its
suppliers. With respect to its operations in India, for FY21 and 6M FYY22, 59.8% and 66.1% of the raw materials/finished goods was
imported, respectively, and the rest was obtained through domestic suppliers.

• In particular, as far as Indian operations are concerned, China is its largest export market (accounting for ₹841.4 crore, or ~51.2%)
(predominantly from castor sales) out of overall export sales of ₹1,643 crore for the 6M FY22). Any import restriction imposed by
China on its products may have a disproportionate impact on its export sales.

• It is the largest exporter of castor oil and castor oil derivatives, and is among the five largest exporters of oleochemicals in India as
of 31st March, 2020 (Source: Technopak Report). Import restrictions by other countries on its products may have a material
adverse impact on the operations.

• The products are in the nature of commodities and their prices are subject to fluctuations that may affect the company’s
profitability.
 STATEMENT OF PROFIT AND LOSS
Data for the
Particulars Data for the period (₹ crore)
period ended
2019 2020 2021 30th Sep, 2021
Revenue From Operations 28,797.5 29,657 37,090.4 24,874.5
Other Income 122.2 110 105.2 82.8
Total Income (I) 28,919.7 29,767 37,195.6 24,957.3
Cost of Materials Consumed 21,844.8 22,326.6 32,276.1 21,965
Purchases of Traded Goods 3,185 2,573.9 1,158.8 1,063.1
Changes In Inventory of Finished goods and by products 35.3 469.7 (945.1) (674.2)
Employee Benefit Expenses 206.9 223.9 321.7 170.6
Finance Costs 486.9 569.2 406.6 291
Other Expenses 2,593.5 2,994.7 3,220.9 1,687.3
Total Expenses (II) 28,352.4 29,158 36,439 24,502.8
Profit/(Loss) Before Tax (I-II) 567.3 609 756.6 454.5
Total Tax Expense (III) 212.3 206 103.9 119.7
Share of Profit in Joint Ventures (IV) 20.5 57.8 74.9 22.3
Net Profit/(Loss) for the Period (I-II-III+IV) 375.5 460.8 727.6 357.1
 STATEMENT OF ASSETS AND LIABILITIES
Particulars Data as on 31st March (₹ crore) Data as on
2019 2020 2021 30th Sep, 2021
Property, Plant and Equipment 2,804.5 3,508 3,465.8 3,823.1
Right Of Use Assets 203.9 231.7 220.7 236.8
Capital Work In Progress 570.4 324.9 530.5 687.9
Investments (current and non-current) 147 206 332.1 354.5
Inventories 4,041.6 3,826.4 4,777.7 7,565.2
Trade Receivables 1,258 921.1 1,515.1 1,857.7
Cash & Cash Equivalents 1,257.8 1,475.3 1,231.5 1,742.5
Other Non-current Assets 245.6 183.9 146.4 217.7
Other Current Assets 1,074 1,108.6 1,106.8 1,438.3
Total Assets 11,602.8 11,785.9 13,326.6 17,923.7
Total Equity 2,111 2,570.7 3,298.1 3,651.4
Borrowings (current and non-current) 1,829.4 2,300.2 1,904 1,944.4
Trade Payables 6,650.4 5,697.1 6,264.4 10,465.9
Other Liabilities (current and non-current) 1,012 1,217.9 1,860.1 1,862
Total Liabilities and Equity 11,602.8 11,785.9 13,326.6 17,923.7
 STATEMENT OF CASH FLOW
Particulars Data for the year ended 31st March Data for the
(₹ crore) period ended
2019 2020 2021 30th Sep, 2021
Net cash generated from / (used in) operating activities (A) 1,693 781.3 926 1,022.7
Net cash generated from / (used in) investing activities (B) (933.6) (506.4) (483.8) (786)
Net cash generated from / (used in) financing activities (C) (762.3) (7.8) (731) (200.4)
Net increase / (decrease) in cash and cash equivalents
(2.9) 267.1 (288.8) (36.3)
(A+B+C)
 KEY METRICS
Particulars Data for the year ended 31st March Data for the
(₹ crore) period ended
2019 2020 2021 30th Sep, 2021
EBITDA Margin (%) 4.33 4.77 3.85 3.56
PAT Margin (%) 1.3 1.55 1.96 1.43
Return on Capital Employed (%) 12.75 12.76 11.06 5.79
Fixed Asset Turnover Ratio 8.57x 7.77x 9.31x 5.53x
Return on Net Worth (%) 17.79 17.93 22.06 9.78

Debt to Equity Ratio 0.5x 0.5x 0.39x 0.34x

 KEY TAKEAWAYS
• Revenue from sale of products increased by 25.2% to ₹37,039.4 crore for FY21 from ₹29,586 crore for FY20, primarily due to an
increase in the unit selling price of products as a result of a surge in commodity prices in FY21. As a result, the average selling price
of edible oil products increased by 24.84%. In particular, the average selling price of palm oil increased by 32.62%, and the average
selling price of soyabean oil increased by 19.77%. Sales volume grew by only 4.01% to 4,484,175 MT for FY21 from 4,311,492 MT
for FY20 due to the impact of COVID-19.

• The revenue generated from top 5 products under Fortune, its flagship brand, amounted to ₹14,312.6 crore and ₹8,612.5,
respectively for FY21 and 6M FY22.

• Company recently acquired 100% of the equity share capital in Adani Wilmar Pte Limited on 25th June 2021 for a consideration of
US$24.09 million. For 6M FY22, AWPL along with its subsidiaries contributed a net loss of ₹6.7 crore to its net profit. Further, the
difference between the purchase consideration and the net asset value of AWPL was recorded as a goodwill in the amount of
₹56.2 crore.
 SWOT ANALYSIS
• Adani Wilmar is one of the few large FMCG food companies in
India to offer a wide array of packaged foods, including edible
Strengths Opportunities oil, wheat flour, rice, pulses, besan, soya chunks, ready-to-cook
khichdi and sugar.
Strong brand recall Penetration in sub
with leadership
position
urban and rural
regions
• It intends to increase penetration in rural and semi-rural areas
by launching its masstige brands, since these markets offer a
Widespread E-commerce significant growth opportunity for expansion. It intends to
distribution network platforms develop its own e-commerce platforms.

• The company seems to be richly valued with poor margins.

Threats Weakness
Low entry barriers Low EBITDA and PAT
Unfavorable import margins
conditions High reliance on one
product category
 IPO NOTE
TIMELINES

Finalization Credit of
of basis of shares to
Issue Opens allotment depository

27 31 3 4 7 8
Jan Jan Feb Feb Feb Feb

Issue closes Initiation of IPO Listing

refunds Date

Disclaimer:
This document is published for learning purposes only and nothing contained herein shall be
construed as a recommendation on any stock or sector.
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