Adani Wilmar IPO to open next week: 10 things to know before investing

The ₹3,600-crore initial public offering (IPO) of Adani Wilmar, a 50:50 joint venture between Gautam Adani's Adani Group and Singapore-based Wilmar Group, is set to open for public subscription on January 27. The FMCG company, which sells cooking oils under the Fortune brand, has fixed a price band of ₹218-230 a share for its IPO. The three-day offering will be a completely fresh issue of equity shares and there will not be any secondary offering.

Adani Wilmar will be the seventh Adani group company to join the exchange as six subsidiaries of the conglomerate are already listed on the domestic bourses. The list includes Adani Enterprises, Adani Green Energy, Adani Power, Adani Transmission, Adani Total Gas, and Adani Ports and Special Economic Zone.

Here are 10 key things investors must know before investing in Adani Wilmar IPO:

Open and close date: The highly anticipated IPO will open for public subscription on January 27 and will close on January 31, 2022. The bidding for anchor investors will begin on January 25.

Issue size: The offer comprises a fresh issue of new equity shares for an amount of up to ₹3,600 crore. The company has trimmed its IPO size to ₹3,600 crore from ₹4,500 crore as planned earlier.

Price band: The Ahmedabad-based company will offer shares in the price band of ₹218-230 apiece.

Lot size: Investors can apply for a minimum of 65 equity shares and in multiples thereof. A retail investor can bid for up to 13 lots or 845 shares, which would cost around ₹194,350.

Shareholders quota: As much as 50% of the net issue will be reserved for qualified institutional buyers (QIBs), 35% for retail investors, and the remaining 15% will be allocated to non-institutional buyers. The company has also reserved equity shares worth up to ₹107 crore for its eligible employees.

Objective of the issue: The company intends to use the IPO proceeds to fund capital expenditure for the expansion of existing manufacturing facilities as well as developing new units. A part of the fund will be also used to repay debts, fund strategic acquisitions and investments, and meet general corporate requirements.

Listing: The stocks of Adani Wilmar will be listed on domestic exchanges, Bombay Stock Exchange (BSE) and National Stock Exchange (NSE). The tentative date for the listing of shares is February 8, 2022.

Financials: The company, which sells edible oil, packaged food and cooking essentials under "Fortune" brand, had reported profit after tax (PAT) of ₹727.65 crore during the year ended March 31, 2021, compared to ₹460.87 crore in the previous fiscal. The total revenue of the company stood at ₹37,196 crore in FY21 as against ₹29,767 crore in the financial year ended March 31, 2020.

Industry overview: The combined share of the top six players in the branded oil business (Adani Wilmar, Ruchi Soya, Emami, Cargill, Bunge and Marico) has been estimated to around 40% in FY20. Adani Wilmar and Ruchi Soya are few of the largest suppliers of edible oil with outputs of 2.8 million metric tonnes (MT) and 1.4 million MT, respectively, in FY20. Ruchi Soya is the largest player in branded palm oil market with a share of 12% in terms of value, followed by Adani Wilmar with a share of 11%. Meanwhile, Adani Wilmar is the largest player in branded refined soyabean oil having a market share of 28% followed by Ruchi Soya with a share of 11% by value.

Lead managers: The company has appointed ICICI Securities, HDFC Bank, BNP Paribas, Kotak Mahindra Capital, JP Morgan, BofA Securities and Credit Suisse as the book running lead managers for the offer. Link Intime India has been appointed as the registrar to the issue.