Adani Wilmar's Promoter Group to Trim Stake to Meet SEBI Norms

In a bid to comply with SEBI's minimum public shareholding norms, the promoter group of Adani Wilmar, the Fortune Oil-maker, has announced its intention to reduce its stake. Adani Commodities LLP and Lence Pte Ltd, the promoters, plan to sell up to 1.24% of the company's total paid-up equity share capital, amounting to 16.11 lakh equity shares.

SEBI regulations require promoters to hold a maximum of 75% stake in a listed company, with the remaining 25% allocated to public float. Adani Wilmar, listed on February 8, 2022, has until February 7, 2025, to meet this requirement. The proposed divestment is scheduled from December 26, 2023, to January 31, 2024, or until the completion of the sale.

As of the July-September quarter, the promoters' overall holding stands at 87.94%. The public currently holds 11.4%, while the holdings of FIIs and DIIs are each below one percent. The company's shares declined  30.41% in 2023, primarily following the release of the Hindenburg report.

Background on Adani Wilmar

Adani Wilmar, a joint venture between Adani Enterprises and Wilmar International, emerged as India's largest palm oil supplier after its listing. The IPO, launched at ₹230 per share in 2022, aimed to raise ₹3600 crore. However, the company faced challenges in the first half of the financial year, with a 13% YoY decline in revenues attributed to a sharp correction in edible oil prices and ongoing restrictions on rice exports.

Adani Wilmar Stock Performance

Adani Wilmar's stock recently rose by 4.25% in the past month, showing short-term positive movement. However, over a six-month period, investors faced a decline of 10.72%. The stock's performance over the past year has been more challenging, with a drop of approximately 31%. In September 2022, the stock reached its highest point at ₹809, but since then, it has sharply fallen by 55%, currently trading at ₹363 per share.

During the second quarter of FY24, the company faced challenges, reporting a net loss of ₹130.73 crore. This is a notable contrast to the net profit of ₹48.76 crore in the same quarter of the previous fiscal year. Additionally, the company's performance declined from the preceding June quarter, which had a net loss of ₹78.92 crore.

Adani Wilmar's strategic divestment aligns with SEBI regulations, and the company seeks to balance promoter and public holdings by the stipulated norms.