ICICI Securities sees 42% upside in AWL Agri as foods push gathers pace, retains ‘Buy’~

ICICI Securities has retained its “Buy” rating on AWL Agri Business Ltd. with an unchanged target price of ₹250, indicating a potential upside of approximately 42% from the current market price of ₹176. The brokerage remains optimistic about the company’s growth prospects, supported by the continued expansion of its Food & FMCG business, improving profitability across key segments and a widening distribution network. The maker of popular brands such as Fortune and Kohinoor is expected to deliver steady earnings growth over the next two financial years, driven by stronger operational performance and increasing contributions from emerging business channels.

Reflecting this outlook, ICICI Securities has revised its FY27 and FY28 earnings estimates upward by approximately 2%. The brokerage expects AWL’s revenue to reach ₹858 billion in FY27 and ₹926 billion in FY28, while EBITDA is projected to increase to ₹24.1 billion and ₹26.8 billion, respectively. Net profit is estimated at ₹11.9 billion in FY27, representing a 14% increase, followed by a further 12% growth to ₹13.3 billion in FY28. Between FY26 and FY28, the brokerage expects revenue, EBITDA and net profit to grow at a compounded annual rate of 11.3%, 12.3% and 12.7%, respectively, reflecting confidence in the company’s ability to sustain growth across its diversified portfolio.

A key contributor to this growth is expected to be AWL’s Food & FMCG business, which continues to gain scale and strengthen its presence in the packaged foods market. Management aims to improve margins in this segment towards the high single digits over the medium term, beginning FY28, compared with 3.2% reported in the latest quarter. The segment has already demonstrated strong momentum, recording 32% revenue growth in the September quarter. Within the portfolio, Fortune Pulses crossed ₹1 billion in quarterly revenue, while the health and convenience products portfolio exceeded ₹14 billion in revenue over the last twelve months. GD Foods, which operates in categories such as pickles, noodles and sauces, also reported robust growth of 36%, further strengthening AWL’s position in the packaged foods segment.

The brokerage also highlighted stable profitability in AWL’s edible oil and Industry Essentials businesses. In edible oil, management expects EBITDA to remain within the guided range of ₹4,000 to ₹4,500 per tonne, with the latest quarter delivering ₹4,100 per tonne. The Industry Essentials segment reported EBITDA of ₹4,300 per tonne, exceeding its guided range of ₹3,000 to ₹3,500 per tonne. Management expects the segment to maintain high single digit to low double digit growth, supported by increasing contributions from oleochemicals and specialty chemicals, which currently account for approximately 45% of segment revenue.

AWL’s expanding distribution network and growing presence across emerging sales channels are also expected to support its next phase of growth. The company’s total retail reach has expanded to approximately 2.6 million outlets, including direct distribution to nearly 0.97 million outlets. Alongside its traditional general trade network, AWL is strengthening its presence in quick commerce, HoReCa and export markets. During the quarter, quick commerce recorded growth of over 40%, HoReCa revenue increased 22%, and branded exports surged 72%, reflecting the company’s efforts to diversify its revenue streams and reach a wider consumer base.

On the financial front, ICICI Securities expects AWL’s balance sheet to strengthen further, supported by improving cash generation and working capital efficiency. Operating cash flow is projected at ₹20.2 billion in FY27 and ₹26.7 billion in FY28, while free cash flow is estimated to increase from ₹11.9 billion to ₹18.4 billion over the same period. The brokerage expects the company to move into a net cash position, with net debt to EBITDA projected at negative 1.0 times in FY27 and negative 1.4 times in FY28. Management also expects inventory levels to normalise over the coming quarters, which could further support cash flow generation.

At the current market price, AWL trades at 19.2 times its estimated FY27 earnings and 17.1 times FY28 earnings, according to ICICI Securities. The brokerage has maintained its target price of ₹250 based on a sum of the parts valuation methodology, citing the company’s expanding foods portfolio, stable profitability in edible oils, strengthening distribution capabilities and improving financial position as key factors supporting its positive outlook. A sharper than anticipated improvement in operating margins has been identified as a potential upside to its earnings estimates.