In a notable turn of events, Adani Wilmar share price witnessed a substantial surge recently, following the government’s decision to extend lower tax rates on the import of edible oils until March 2025. This move had a profound impact not only on Adani Wilmar but also on other edible oil companies, such as Patanjali Foods, Kriti Nutrients, and Shri Gang Industries, all of which experienced significant gains in their share prices. In this comprehensive analysis, we will delve into the factors contributing to the surge in Adani Wilmar share price, the broader implications of the government’s policy extension, and the strategic moves undertaken by the company and its promoters.
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Adani Wilmar share price Resounding Performance:
At the forefront of the recent market rally is Adani Wilmar Ltd, a major player in the FMCG sector with a focus on cooking oil manufacturing and sales. The company’s market value increased to Rs 47,503 crore, and its share price surged by 5.2% to Rs 369.75 on BSE.
This surge was accompanied by a strategic announcement from Adani Wilmar’s promoters, Adani Commodities LLP and Lence Pte Ltd, expressing their intention to divest 1.24% of the company’s paid-up capital.
Government’s Impact on Edible Oil Shares:
The government’s decision to extend the lower import duty structure on crude palm oil, crude sunflower oil, and crude soy oil until March 2025 served as a catalyst for the surge in Adani Wilmar share price and other edible oil companies. This policy, following a previous reduction in basic import duties on refined soybean oil and refined sunflower oil in June 2023, is aimed at ensuring the availability of edible oils at affordable prices for consumers.
Patanjali Foods and Other Players Join the Rally:
Patanjali Foods, specialising in the sale of cooking oil, also experienced a notable uptick in its share price, surging by 5.55% to reach Rs 1628 on BSE. Kriti Nutrients, a key player in soybean oil, and Shri Gang Industries, a vegetable oil seller, recorded gains of 7.42% and 4.97%, respectively. The collective positive momentum across these companies underscores the overall optimism in the edible oil market fueled by the government’s supportive policies.
Extended Lower Import Duty and Market Dynamics:
The government’s move to extend the lower import duty structure on crucial edible oils provided a much-needed boost to the industry. With the lower import duty set to expire in March 2024, the fresh order extending it by another year has instilled confidence in both market participants and consumers. This extension is expected to contribute to easing domestic retail prices, particularly in refined sunflower oil and refined soybean oil, ultimately benefiting consumers.
Adani Wilmar share price Promoters Strategic Move:
The announcement from Adani Wilmar’s promoters, Adani Commodities LLP and Lence Pte Ltd, regarding their intention to divest part of their shareholding is a strategic move to comply with SEBI regulations. A maximum of 1.6 crore shares, or 1.24% of the total, are expected to be sold between December 26, 2023 and January 31, 2024. This is in line with the legal mandate that companies attain a minimum of 25% of public shares within five years of listing.
SEBI Regulations and Minimum Public Shareholding Norms:
SEBI’s regulations mandate that companies maintain a minimum public shareholding of 25% within five years of their listing. Adani Wilmar, which listed on February 8, 2022, has until early 2025 to meet this norm. The current promoter shareholding stands at 87.94%, and the proposed divestment is a proactive step towards achieving compliance.
Adani Wilmar’s Strategic Evaluation:
In a recent media interaction, Adani Wilmar’s Group Chief Financial Officer, Jugeshinder Singh, outlined the group’s ambition to be a leader or among the top three in all its business endeavors. Singh emphasized that if the group couldn’t achieve this goal, it would consider an exit. Currently, the company is conducting a strategic evaluation of its prospects; in three months, a decision regarding scaling up or, potentially, exiting entirely, is anticipated.
Market Position and Financial Performance:
Adani Wilmar share price holds a substantial market share in India’s edible oil consumption, accounting for 12% of the market. In branded consumer pack oils, the company boasts a 20% market share. In the retail packaging field, we have the third largest market share for rice and the second largest market share for wheat. Adani Wilmar’s Fortune brand has reported annual sales of $2.5 billion. The company reported strong financial performance in FY23, reporting EBITDA of Rs 1,600 crore on revenue of Rs 58,000 crore.
The surge in Adani Wilmar share price, coupled with the positive momentum in other edible oil companies, reflects the dynamic interplay of government policies, market dynamics, and strategic corporate decisions. As Adani Wilmar navigates the path towards meeting minimum public shareholding norms and evaluates its future prospects, investors and industry observers will be closely monitoring how the company positions itself in the evolving landscape of the edible oil sector. The extended lower import duty and the strategic divestment by Adani Wilmar’s promoters underscore the resilience and adaptability of companies in the face of regulatory changes and market forces.