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Adani Wilmar Limited (AWL) records 25% volume growth in Q1 ‘24, with broad-based growth across all segments

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The Company delivered another strong quarter with 25% YoY volume growth, capturing the robust  consumer demand. The sale of branded products in both edible oils and foods has been much stronger  compared to overall sales of respective segments. While the volume growth was strong at 25% YoY, the  sales value declined by 12% on YoY basis, which is reflective of the steep decline in edible oil prices.

The Food & FMCG segment recorded a strong revenue growth of 28% YoY to record close to INR 1,100  crores of revenue for the quarter.

Both urban and rural areas have witnessed strong demand. The oil and foods continued to grow at a rapid  pace in the alternate channels (E-com, MT, eB2B etc.) and recorded around 50% YoY volume growth for  the quarter. The Company kept its focus on expanding the distribution of both oil and food products in  the General Trade channel. The sale of branded products to HoReCa clients continued to grow strongly  with expansion of its distribution network in more cities and acquisition of new client accounts.

Over the time, the “King’s” brand has steadily built up a strong brand equity for edible oils in the  masstige segment, delivering high-quality products to a large number of households. As a result,  it has been the third-best selling brand of soyabean oil in India. The company is now  strengthening the King’s brand and positioning it across its entire range of packaged oils and  foods to gain market share from regional brands.

Since Q1 of the last fiscal year, the price of edible oils has been declining. This trend continued  during Q1’24 with the price of edible oils experiencing further decline, in the range of 5% to 20%  (Q1’24 vs Q4’23), before recovering as the quarter came to a close. This reduction has been  attributed to a combination of factors, including the decline in consumer demand in developed  economies, easing of supply at the Black Sea region and robust production of oilseeds globally.

Decline in edible oil prices continued in Q1 as well, leading to high-cost inventory.  Hedges dis-alignment: Prices on commodity exchanges, which are used by Company to  hedge price risk didn’t move in tandem with physical prices. As a result, hedges were in loss  without corresponding gain in physical trade.

TRQ disparity continued for this quarter as well.

Finance cost: Interest expenses went up on YoY basis, with the increase in the benchmark  rates on the back of hike in the Fed rates

Bangladesh: Wholly owned subsidiary in Bangladesh made losses of ~INR 21 cr. in Q1, due  to price caps by Government on edible oils, local currency-related issues, and unavailability  of counter party for forex hedging. This has resulted in lower consolidated PAT, compared  to the standalone PAT.

Commenting on the results, Mr. Angshu Mallick, MD & CEO, Adani Wilmar Limited said, “We have regained the momentum in our edible oil business with the decline in the edible oil  prices. The soft prices of edible oil are expected to augur well for the industry. The company is  gaining good share from regional brands in the under-indexed customer segments with  marketing and sales focus on specific geographies and oil categories. To capture the opportunity  in the value-added blended oils, Company is investing in this segment, under Xpert brand.

In Food & FMCG segment, this was the eighth consecutive quarter with 20%+ volume growth  and 30%+ revenue growth, on YoY basis for the standalone Company.

Recognizing the pressing need of Indian households for genuine and consistent quality of whole  wheat, the Company launched four premium grades (including Sharbati) of Whole Wheat under  the Fortune brand in select markets. We developed a multi-purpose cleaner as a forward integration of our oleo-chemical products and launched this product under ‘Ozel’ band for  HoReCa segment.

Our margins during the quarter got impacted by high-cost inventory in a falling edible oil price  environment and dis-aligned hedges compared to spot prices of physical commodity.”

Way Forward:

Distribution expansion, gaining share in under-indexed markets and margin improvement will  be the key priorities going forward in the consumer pack segment in both Edible Oil and Food  segments. The Company sees large opportunity in the HoReCa, institutional segment and  exports as well and is working on plans to exploit these opportunities.