Shares of Adani Wilmar (AWL) dipped 4 per cent to Rs 681 on the BSE in Thursday’s intra-day trade after the company said its overall revenue in the July-September (Q2FY23) quarter will grow in low single-digit on an annual basis, amid a fall in rates of edible oils. AWL markets its edible oils and other food items under the ‘Fortune’ brand.
Stock of the Adani Group company was trading lower for the fourth straight day, falling 9 per cent during the period. It had hit a record high of Rs 878.35 on April 28, 2022. At 10:16 AM, AWL was trading 3 per cent lower at Rs 686.25, as compared to 0.58 per cent decline in the S&P BSE Sensex.
“Multiple macro challenges continued to impact the business in the quarter gone by (Q2FY23) owing to domestic and global cues, continued geo-political standoff, rising interest rates, slow uptick in the rural demand, and delayed withdrawal of monsoon in major parts of India,” AWL said in Q2FY23 business update.
However, the company also saw some positive signs of recovery, with softening of commodity prices and higher foodgrain production estimates for FY22. In edible oil context, the second quarter essentially absorbed the market shocks of high inflation followed by sharp decline in prices, the company said.
Also Read : Bajaj Auto Q2 preview: Ebitda may rise up to 34% YoY, margins seen flat
The prices of edible oils, namely – palm oil, soyabean oil, and sunflower sharply declined in the quarter, and are now trending more or less at pre-Covid levels.
“Sharp fall in prices left most of the players with high price inventory in hand. Company passed on the benefit of lower prices to customers in a bid to protect market share. This, coupled with currency depreciation, will have impact on margins for this quarter, which is purely cyclical in nature on account of events that industry witnessed in this quarter,” the company said.
In view of these developments, AWL expects overall revenue to grow in low single digit during the quarter (year-on-year), whereas revenues and volumes for the first half of FY23 (H1FY23) are expected to register a low double-digit growth.
However, the company remains optimistic on their brand equity and therefore is hopeful of sequential improvement in demand trends with easing retail inflation, and good monsoon. The consumption may see an uptick in H2FY23 on the back of festivities and softening of prices across food categories, it said.