AWL - Adani Wilmar Limited Share Price

Management's outlook for AWL Agri Business Limited reflects a solid performance in Q4 FY25, with a significant revenue increase of 38%, totaling INR 18,230 crores. Volume growth stood at 8% for the quarter and 9% for the entire year. The company achieved an EBITDA of INR 2,700 crores and a PAT of INR 1,200 crores, marking one of its best years since inception.

Key forward-looking points discussed include:

1. Growth Target: The edible oil segment is expected to grow by 7-8% in FY26, driven by lower palm oil prices and an increase in demand. Management anticipates that palm oil prices will stabilize, enhancing competitiveness.

2. Financial Projections: The management aims to deliver an EBITDA per ton of INR 3,500 to INR 3,600, inclusive of all segments and other income. This projection is influenced by the favorable commodity cycle experienced in FY25 and the expectation of lower margins in FY26 compared to this year.

3. Food & FMCG Segment: The company targets INR 10,000 crores in revenue from this segment by FY27, growing at around 20%, following a challenging year where growth was influenced by rising wheat prices affecting branded wheat flour consumption.

4. Acquisition of GD Foods: The integration process is underway, focusing on leveraging distribution networks and synergies in sourcing raw materials. The management is optimistic about the revenue potential of GD Foods, aiming to double its current revenues in the coming years.

5. Capex Plans: The capex for FY26 is projected to be limited, focusing on maintenance and possible new opportunities, with a range of INR 500-600 crores.

Overall, while facing some supply chain and competitive challenges, the management remains committed to enhancing market share, particularly in the edible oil segment, and believes that improvements in the food basket will contribute positively to the overall growth strategy moving forward.

Question 1: "What is your view on likelihood of an increase in import duty on refined palm oil, and how would that impact your overall margins?"

Answer: I believe that increasing the differential duty from 7.5% to at least 15% on refined palm oil would significantly benefit local processing. The government seems receptive to this change, recognizing the need to support domestic production. Although this quarter reflected margin pressures, overall, our margins have been stable. We expect edible oil to maintain its performance, especially as we reclaim market share lost to high palm prices.

Question 2: "Was there any inventory loss affecting EBITDA margins this quarter, and how do you forecast Q1 and Q2?"

Answer: Yes, we experienced inventory adjustments due to the commodity cycle, which can affect quarterly margins. We advise looking at our performance over broader periods, as commodities can fluctuate. For Q1 and Q2, we aim for EBITDA per ton of INR3,500 to INR3,600. Despite previous exceptional margins, we're optimistic about returning to stable profitability levels moving forward.

Question 3: "Given the challenges in palm oil market share, what steps are you taking to regain it?"

Answer: Our strategy includes promoting flanker brands and enhancing our distribution reach in smaller towns. High palm oil prices shifted consumer preferences, but as prices stabilize, we believe we can reclaim lost market share, particularly as warmer months usually see higher palm oil consumption.

Question 4: "What revenue do you expect from the Food & FMCG business in the next two years?"

Answer: We project to reach INR10,000 crores in revenue by FY '27. The food business is currently at INR6,000 crores and growing at approximately 20% year-on-year. The focus remains on investment and market penetration for the next 2-3 years, targeting an EBITDA-neutral position before margins improve.

Question 5: "What is the expected tax rate for the next year?"

Answer: Our effective tax rate currently stands at 25.8%. Moving forward, you can expect it to remain stable at about 25%, as our operational structure does not foresee significant changes in tax obligations.

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