Adani Wilmar IPO bounces back after a tepid listing

Wilmar's downsized Rs 3,600 crore-offering was subscribed 17.37 times

Adani Wilmar's initial public offer (IPO) made a tepid listing on Tuesday with a 4 per cent discount, listing at Rs 221 on the Bombay Stock Exchange (BSE). On the National Stock Exchange, the share listed at Rs 227, a 1.3 per cent discount from its issue price of Rs 230.

However, the stock is up over 10 per cent and is now trading at Rs 260 levels on both the bourses.

The Rs 3,600 crore IPO was oversubscribed 17 times in the three trading sessions between January 27-31. The non-institutional portion was booked 56.30 times, whereas retail investors picked up 3.92 times while the qualified institutional buyers subscribed 5.73 times.

Adani Wilmar Limited is a joint venture between the homegrown Adani Group and Singapore's Wilmar Group. Under the brand, it offers packaged food which includes Fortune (India’s largest-selling oil brand). It also offers a wide range of products in the essential groceries category such as rice, wheat flour, pulses, soya chunks, ready-to-cook items and besan.

Adani Wilmar has reported a good set of numbers in the past, shows its prospectus data. In FY21, the company reported a consolidated profit at Rs 727 crore, up 58 per cent and revenue came in at Rs 37,090 crore, up 25 per cent from the previous fiscal year.

What should investors do?

Likhita Chepa, Senior Research Analyst at CapitalVia Global Research believes that the IPO listed at a discount owing to the weaker sentiments of the secondary market in the last few trading sessions and investors who subscribed solely for the purpose of listing gains can square off their positions in the range of Rs 255- 260. “Short term investors can hold the stock and book profits at 30-40 per cent, i.e they can book profits at Rs 290-300. Long term investors and investors looking to buy the stock on the listing day can consider holding/buying this stock, given its wide distribution, healthy financials, strong brand recall, increasing reach and household consumption”.

Santosh Meena, head of research at Swastika Investmart expected listing gains to be in the range of 10-15 per cent, which could be attributed to weak market sentiments. Adding that the fundamentals and valuations were reasonable for this IPO. “Those who applied for listing gain can maintain a stop loss of Rs 200 while long-term investors should hold it. New investors can also look at buying opportunities at initial weakness”, forecasts Meena.

Watch the latest coronavirus videos here: