Edible oil shares in focus: AWL, Patanjali Foods freeze at 5% upper circuit

Shares of edible oil companies Adani Wilmar (AWL) and Patanjali Foods were locked at 5-per cent upper circuit band each on the BSE on expectation of higher demand ahead of festive season.

Individually, AWL hit nearly four-month high of Rs 770.05, having surged 39 per cent in the past three months. With this, the Adani Group company regained Rs 1-trillion market capitalisation (market cap) today. The company’s flagship brand ‘Fortune’ is the largest edible oil brand in India.

The stock was trading at its highest level since May 25, 2022. It had hit a record high of Rs 878.35 on April 28. Average trading volumes on the counter more-than-doubled with a combined 4.6 million equity shares having changed hands on the NSE and BSE till 01:33 PM. There are pending buy orders for 460,000 shares.

Meanwhile, shares of Patanjali Foods, too, saw its average trading volumes jumping over 100 per cent with 435,000 equity shares changing hands, so far, in trades today. The stock was trading at Rs 1,401.45, having rallied 25 per cent in the past one month.

In comparison, the S&P BSE Sensex was up less than 1 per cent during the period. Patanjali Foods also regained Rs 50,000 crore market-cap today. The stock had hit a 52-week high of Rs 1,415 on September 12.

Analysts at HDFC Securities have initiated coverage on Patanjali Foods with a ‘buy’ rating. “For two quarters’ time horizon, the base fair value of the stock is Rs 1,490, while bull case fair value is Rs 1,602,” the brokerage firm said in its report. The brokerage believes Patanjali Foods is well positioned for accelerated growth and consistent value creation for shareholders going forward.

Patanjali Foods is market leader in the branded TSP (Textured Soya Protein) space, under Nutrela brand; it is one India’s largest integrated edible oil company having presence across the entire value chain of palm and soya segment with a healthy mix of upstream and downstream business. Besides the consumer facing business, Patanjali Foods is one of the largest oil palm plantation companies in India with allocated area of ~5 lakh hectares across 10 states.

“Given the predominance of oil business even after 2 years from now, the valuations of Patanjali Foods may still be short of its peer FMCG companies. However, it may grow much faster than its peers over the next two years. We have taken this into account while arriving at the price targets,” the brokerage firm said.

Meanwhile, AWL intends to achieve a steady growth and become the largest food FMCG company in India across all key packaged food segments. Furthermore, the company aims to bolster its distribution network and ensure uninterrupted supply lines to make inroads into Tier-III cities and rural landscape. Besides this, the company intends to capitalize untapped markets and expand its product line up with ready-to-cook and ready-to-eat segments.

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