Buy AWL Agri Business: target of Rs 250: ICICI Securities

What happened

ICICI Securities kept a BUY rating on AWL Agri Business with a target price of Rs 250. AWL reported Q2FY27 revenue growth of 26% year on year, while normalised EBITDA rose 11%, which means earnings before interest, tax, depreciation and amortisation.

Confirmed

Global impact / market context

Rising revenue across edible oil, food and industry essentials suggests the company is selling more broadly. However, negative operating cash flow from a large inventory build means cash available fell, so investors should weigh growth against the cash tied up in stock.

Analyst inference

The broker raised its earnings estimates by about 2% for the next two financial years and expects revenue, EBITDA and profit to grow at low double-digit rates through that period. That supports the unchanged target price, though the rating depends on margins improving as planned.

Analyst inference

What to watch

1. Watch whether the roughly INR 66bn inventory build from sunflower supply disruptions unwinds as management expects, since that would restore operating cash flow which is cash generated from normal business operations. Confirmed
2. Management aims to expand Food and FMCG margins toward the HSD range over the medium term starting FY28, so track whether investment spending on this segment begins to produce higher profit per sale. Proposed
3. Monitor edible oil realisations and pricing discipline, because revenue growth there came from higher prices; weaker pricing or sourcing costs could pressure profit per sale and challenge the Rs 250 target. Analyst inference

Evidence

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