Adani Wilmar Q3 Results: Profit Up 16%, Volume Growth In High Teens

Adani Wilmar Ltd.'s third quarter profit rose, but missed estimates, while volumes were aided by out-of-home consumption in the festive season and gradual recovery in the rural markets.

Consolidated net profit of the owner of the 'Fortune' brand rose 16% over the previous year to Rs 246.16 crore in the quarter ended December, according to its exchange filing. That compares with the Rs 536.6-crore consensus estimate of analysts tracked by Bloomberg.

Its wholly-owned subsidiary in Bangladesh made a loss of Rs 47 crore in the third quarter and Rs 51 crore in the nine months of the current fiscal.

"The Q3 loss was accentuated by local currency-related issues such as significant reduction in dollar availability for imports, price caps by the government on edible oils and unavailability of counter party for forex hedging. This has resulted in lower consolidated profit after tax," it said.

Adani Wilmar Q3 Highlights (YoY)

• Revenue from operations rose 7% to Rs 15,438.05 crore as compared with the Rs 14,598.57-crore estimate.

• Operating profit rose 20% to Rs 605.22 crore against a forecast of Rs 787.07 crore.

• Margin stood at 3.9% vs 3.5%. Analysts had projected the metric at 3.7%

• Revenue from edible oil business increased 3.88% to Rs 12,581.21 crore, while that from food business jumped 45% to Rs 1,019.5 crore.

• Industry essentials segment saw a 18% rise in revenue to Rs 1,837 crore.

• Volume growth was up 16% during the quarter.

"This [volume growth] was achieved on the back of the large opportunity available in the packaged food industry, well supported by our portfolio of premium and popular brands, pan-India distribution and manufacturing facilities across the length and breadth of the country," the consumer goods business of billionaire Gautam Adani said in a statement.

The quarter, according to the company, also saw macro tailwinds in the form of strong demand on the back of festivities and weddings, gradual recovery in rural markets and a bumper kharif crop.

"We continue to stay focused on increasing the direct reach to retail outlets and expanding its manufacturing capacity, both organically and inorganically."

Segment-Wise Performance

• Edible oil volumes were up 9% to 0.96 million metric tonnes.

• Food and FMCG volumes rose 26% to 0.22 million metric tonnes.

• Industry essentials volume stood at 0.29 million metric tonnes, up 38%.

The 'food and FMCG' business is the new growth engine of the company contributing 15% by volume to the overall sales. "Both of our top product categories—wheat flour and rice have been growing well on the back of increased distribution reach and new product launches," it said.

Overall, the food & FMCG basket clocked Rs 2,900 crore of revenue in the first nine months. The company expects this segment to register around Rs 4,000 crore revenue for the fiscal.

"We are leveraging the distribution network, manufacturing facilities, logistics and customer relationships of edible oil business to grow rapidly in the Food & FMCG business, which offers a much larger opportunity compared to our well-established edible oil business," Angshu Mallick, MD & CEO, Adani Wilmar Ltd., said in a statement.

In the edible oil segment, Adani Wilmar continued to gain market share and witnessed "satisfactory" volume growth in the backdrop of weakness in demand for the baking and frying industry.

"Growth was enabled by a portfolio approach of having both premium and popular brands, as well as various types of edible oils, which usually see shift in consumer demand, basis their relative market price," it said.

The company continued its leadership position in castor oil exports, increasing its market share to 32% of castor oil exports from India in the December quarter.

Adani Wilmar is also the largest manufacturer of stearic acid and glycerin in the country. Its Mundra plant, with a total capacity of 800 tonnes per day, has become the largest oleochemical plant in India. The two-and-half-year-old plant enables the company to serve the increased demand of stearic acid, glycerin and soap noodles and other specialty chemical products.

Among channels, the company said, e-commerce, quick commerce, e-B2B and modern trade registered a year-on-year volume growth of 32% in the third quarter.

Rural towns with less than 1 lakh population are contributing around 30% of volume to both edible oil and Food & FMCG business for the company, it said.

Given that most of the India's population resides in those towns, the company has been focusing on increasing our distribution in the rural towns.

In the December quarter, the company expanded its distribution network by 13% over last year, with addition of the sub-distributors network in rural towns. The direct reach, too, increased in double digit across the key categories that has a huge addressable market, such as edible oil, wheat flour and rice.

Market Share

• Adani Wilmar consolidated its market share in edible oil from 19.4% to 19.5%. 'Fortune' continues to be the No. 1 player in India, the company said, citing Nielsen data.

• Fortune Atta gained market share to 4.8% as against 4.3% in Dec 2021; 'Fortune' is No. 2 player in India in the 'atta' category.

• Fortune Basmati gained market share to reach 7.5% as against 6.5% in Dec 2021; Overall market share in Basmati rice along with Kohinoor is 8.4%.

The company has no outstanding long-term debt as on Dec. 31, 2022

Shares of Adani Wilmar Ltd. rose 5% after the results were announced as compared to a flat benchmark Nifty.

Disclaimer: Adani Enterprises is in the process of acquiring a 49% stake in Quintillion Business Media Ltd., the owner of BQ Prime.