Shares of Adani Wilmar and Ruchi Soya have for long been among favourite picks of investors, considering their strong backing by Adani Group and Patanjali Ayurved. Ruchi Soya, which was renamed as Patanjali Foods, on June 24 is listed as Ruchi Soya Industries on NSE and BSE.
While Adani Wilmar made its market debut on February 8, 2022, the Ruchi Soya stock was relisted on January 27, 2020 at Rs 16.10 a share.
Shares of Adani Wilmar listed at Rs 221, a 3.91 per cent discount to their issue price. The issue price of IPO was Rs 230. Since their listing, Adani Wilmar stock has zoomed 163.09 per cent till date. It touched a record high of Rs 878.35 on April 28, 2022, translating into gains of 297.44 per cent against the listing price of Rs 221. However, the stock has seen profit-booking from record levels since then amid weak market conditions and lower-than-expected Q4 earnings.
ALSO READ: Adani Wilmar stock falls 5% as firm cuts edible oil prices
The Adani Group firm reported a 25.6 per cent year-on-year decline in its consolidated net profit for the quarter ended March 2022. The firm reported a profit of Rs 234.3 crore for the quarter ended 31 March, 2022 against a net profit of Rs315 crore in the year-ago period.
The stock was trading at Rs 581.45 on BSE today.
Adani Wilmar stock trades higher than the 100-day and 200-day moving averages but lower than 5-day, 20-day and 50-day moving averages. In a month, the stock has lost 14.42 per cent.
Total 0.15 lakh shares of the firm changed hands amounting to a turnover of Rs 87.94. The market cap of the firm stood at Rs 75,134 crore on BSE today.
On other hand, the Baba Ramdev-owned firm reported a net profit of Rs 314.33 crore in Q4 of the previous fiscal against a net loss of Rs 41.24 crore in the year-ago period.
Ruchi Soya FY22: Total income sees growth of 48.23%; board announces dividend
The Q4 performance is among the key factors which have fueled a rally in the Ruchi Soya stock. Till date, the stock has clocked a stellar rally of 6,391 per cent against its relisting price of Rs 16.10.
On May 19 this year, Ruchi Soya stock hit a 52-week high of Rs 1,228 on BSE. Shares of Ruchi Soya were trading at Rs 1,045.20 on BSE today. Ruchi Soya stock is trading higher than the 20 -day, 100,-day and 200-day moving averages but lower t5-day day 50-day day moving averages. In a year, the stock has lost 3.32 per cent. However, the share has gained 23 per cent in 2022.
ALSO READ: Ruchi Soya Industries Ltd now becomes Patanjali Foods Ltd
Total 2,597 shares of the firm changed hands amounting to a turnover of Rs 27.24 lakh. Market cap of the firm stood at Rs 37,837 crore on BSE today.
Adani Wilmar Ltd is a joint venture between Adani Group and the Wilmar Group of Singapore. It is engaged in the manufacturing of edible oil, wheat flour, rice, pulses, and sugar. The company also owns the popular brand Fortune, which is the largest selling edible oil brand in India.
ALSO READ: Adani Wilmar stock falls 26% from record high: Time to buy, sell or hold?
Patanjali bought Ruchi Soya in 2019 through an insolvency process for Rs 4,350 crore. Ruchi Soya primarily operates in the business of processing oilseeds, refining crude edible oil for use as cooking oil, manufacturing soya products, and value-added products. The company has an integrated value chain in palm and soya segments, having a farm-to-fork business model. It has brands such as Mahakosh, Sunrich, Ruchi Gold and Nutrela.
Here's a look at what analysts said about the prospects of Ruchi Soya and Adani Wilmar shares and which one of them can be a better pick in the long term.
ALSO READ: Adani Wilmar slashes edible oil prices by Rs 10
Manoj Dalmia, founder and director, Proficient Equities
"Ruchi Soya is trading with a book value of Rs 170 and has a PEG of 2.22 which makes it slightly overvalued among its peers, but it is less than Adani Wilmar. Company has an operating profit margin of 6.14 per cent and sales have almost doubled in the last two years. The RoCe and RoE are quite decent at about 16.3 per cent and 15.5 per cent.
Adani Wilmar is trading at Rs 581 at a PEG of 3.21 making it highly overvalued amongst peers. The compounded sales growth is about 18 per cent (5 years). The Operating Profit Margins have been maintained at 3-4 per cent in average which is low compared to Ruchi(Patanjali Foods),the ROCE and ROE are also comparable to the peer Ruchi Soya.
Both of them are operating under the same category of FMCG category and are almost similar fundamentally.
Ruchi Soya seems better here in terms of PE ratio and profit margins compared to that of Adani Wilmar. The brands are also gaining a lot of popularity in the recent times and there are chances of the revenue growing higher considering the market cap which is lesser than Adani Wilmar."
Ravi Singhal, Vice-Chairman, GCL Securities Limited
"As we can see, both stocks are primarily traded in the same FMCG portfolio. If we look at the CAGR of profit over the last five years, Adani Wilmar has a higher CAGR of 29 per cent compared to Ruchi Soya's 21 per cent. However, Ruchi Soya is trading at six times book value whereas Adani Wilmar is trading at 10 times book value. Adani Wilmar has more debt, but its market share is increasing. So, Adani Wilmar is the better stock to invest in. If it maintains these levels, target price over the next year is Rs 900."
Ravi Singh, vice President and head of Research, Share India
"Adani Wilmar and Ruchi Soya both are good for long-term perspective and offer a robust run-up in future. However, the stock of Ruchi Soya is at high valuation zone whereas Adani Wilmar stock is at value buying levels and may give better returns as compared to Ruchi Soya. The stock of Adani Wilmar may touch the levels of Rs 680 in the near term."
Mohit Nigam, Head - PMS, Hem Securities
"Adani Wilmar stock has fallen 51 per cent from its all-time high while Ruchi Soya is currently trading 43 per cent below its all-time high. With Indonesia lifting the palm oil export ban, the dip in palm oil prices will further boost demand.
Adani Wilmar, which primarily operates in three categories (edible oil, packaged food and FMCG) obtains 84 per cent of its revenue from edible oil segment. Driven by triggers such as strong brand recognition, growing consumer preference for branded packaged food from traditional non-branded food, Fortune, their flagship product, is the largest selling branded edible oil will aid in growth of the company.
The company recently acquired Kohinoor brand to strengthen its position in the basmati rice segment and plans to establish its dominance in the FMCG category as well. We recommend investors to buy this scrip at dips.
Ruchi Soya (renamed as Patanjali Foods) is a diversified FMCG company. It is a pioneer of soya chunks with Nutrela enjoying high brand recall. It caters to edible oils, foods, biscuits, nutraceuticals, and palm plantation business. The firm came out with a Rs 4,300 crore FPO in the month of March and is planning to become debt free in the near future along with expanding the plantation business. The company also acquired the food business (21 products) of Patanjali Ayurved which will strengthen its food portfolio. We recommend investors to wait for some correction for fresh buying in the company."
Tirthankar Das, Head of Technical Research, Ashika Group
"The edible oil segment has been resilient during the recent market correction and is seen outperforming the broader market. Within the mid-cap space, the two stocks Adani Wilmar(AWL) and Ruchi Soya are offering a favourable risk-reward proposition at the current juncture.
However, on a comparative basis, Ruchi Soya seems to be the preferred pick as the latter is trading above all the crucial short-term and long-term averages while AWL currently witnessed a slightly deeper correction and is trading below the short-term averages.
On the oscillator front, the weekly RSI recently has generated a buy signal for both but Ruchi seems to be steering stronger as it is trading above the 50-level mark while the former isn't. The weekly MACD for Ruchi Soya is also seen moving into positive territory while the latter fails to signal a positive outlook through the indicator.
The volume trend has shown an accumulation in Ruchi for the past few months thus indicating an increased enthusiasm to push prices higher while the latter lacks volume participation. Hence, it can be expected that the Ruchi to witness a strong up move and head towards Rs 1,200- Rs 1,230 in the near term (falling supply line adjoining highs of June'21 and May'22)."
AR Ramachandran, Co-founder & Trainer, Tips2Trades
"Even though Ruchi Soya PE ratio is almost half as that of Adani Wilmar including operating margins, Adani Wilmar's balance sheet and other metrics like ROCE and more importantly debt-equity along with stronger parent name makes it a stronger long-term buy. Technically, though, long-term investors should try to accumulate Adani Wilmar near Rs 530- Rs 540 levels for long-term targets of Rs 980- Rs 1,150 in the coming months."
