Adani group company, Adani Wilmar stock was locked at the lower at the lower end of the circuit filter with only sellers in the counter for the third straight day. In fact, the shares slid at the lower end of the circuit filter on Wednesday, Thursday and now on Friday. With the circuit filter for the stock at 5%, this was the third straight day of losses, which means investors wealth has eroded by almost 15% in the last 3-days.
Stupendous rally in the stock of Adani Wilmar
Adani Wilmar had come-up with a public issue of shares sometime earlier in January this year. The range for the same IPO was priced at Rs 218-230. The offered shares had a face value of Rs. 1. Now, if we go by the IPO price and considering the present price of Rs Adani Wilmar of Rs 646, the stock has tripled in value over the last few months.
In fact, most of the Adani group companies have had a stellar rally, pushing Gautam Adani to become the richest man in Asia. Recently, the company announced the acquisition of Basmati rice brand 'Kohinoor from McCormick Switzerland GMBH. Adani Wilmar announced about the acquisition through its regulatory exchange on Tuesday citing the takeover will give Adani Wilmar Limited exclusive rights over the brand 'Kohinoor' Basmati rice along with 'Ready to Cook'.
Profit booking in the counter
There is some profit booking that is happening in the counter. Adani Wilmar according to recent reports has become the largest FMCG company, overtaking HUL. The company is one of the largest players in the edible oil business. Recently, the company reported net profits for quarter-ended March stood at Rs 234.29 crore, down 25.62 per cent from Rs 315 crore, declared in the corresponding quarter last year. While the profitability of the company has fallen the shares too have fallen post the declaration of numbers. We would suggest that investors do not buy the stock as there could be further downside risk. Also, valuations are far too stretched, though we believe that growth is a possibility at the company. You might get better entry levels in the stock, though it is doubtful that the stock would go back to its IPO levels.
A word of caution on the markets
Stock prices have come crashing down over the last few days. Investors are advised caution as there could be more downside risks to the markets.
"With one of the major global event (Fed rate hike) now behind - markets should see some stability over the next few weeks. Despite the ongoing Russia-Ukraine war, tightening liquidity and supply chain disruptions, market has been trading in a broader range. Going ahead, domestic equities would continue to track global developments apart from the ongoing earning season for further cues," says Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services Ltd.
Today, most of the Adani Group stocks including Adani Ports, Adani Green Energy, Adani Enterprises were trading lower. In general, investors are advised caution as markets have turned extremely volatile since the tightening by global central banks around the world.