Can Adani Wilmar’s FMCG bet deliver long-term gains?
Adani Wilmar Ltd (AWL) is doubling down on branded foods with its ₹603 crore acquisition of G.D. Foods Manufacturing (India) Pvt. Ltd, the maker of Tops sauces and pickles. The move shows a clear strategy to expand its high-margin, fast-moving consumer goods (FMCG) business, further derisking itself from its core edible oil business.
But will Tops be the growth catalyst AWL needs or just another incremental step in its diversification plan?
To be sure, the acquisition, announced on 4 March 2025, strengthens AWL’s hold in north India, where Tops enjoys a strong retail presence across 150,000 outlets. More importantly, with a 48% gross margin in FY24, according to data from Adani Wilmar’s presentation, the deal is expected to bolster AWL’s long-term push toward a 20-25% gross margin in its food business post-FY28.
The challenge, however, lies in scaling Tops beyond its stronghold and translating those margins into sustained profitability.
The deal value of ₹603 crore implies an enterprise-value-to-sales ratio of 1.6 times based on Tops’ FY24 revenue of ₹386 crore. The valuation appears reasonable. AWL will initially acquire 80% of shares from existing promoters for an enterprise value of ₹603 crore and the remaining 20% in phases over the next three years.
AWL will fund the acquisition through internal accruals and, if needed, the initial public offering (IPO) proceeds. While Tops is strong in jams and sauces, its regional skew means AWL must expand its reach in underpenetrated western and southern markets to justify the valuation.
Accelerating the FMCG pivot
AWL’s timing appears opportune. Fresh off a strong December quarter (Q3FY25)—where revenue surged 31% year-on-year (y-o-y) and profit after tax more than doubled—the company is fast-tracking its FMCG pivot. The foods and FMCG business contributed 10% of consolidated revenues in FY24 at ₹4,994 crore, and grew 23% y-o-y.
AWL aims for a more than 20% compound annual growth rate (CAGR) in volume over the medium term and is targeting ₹10,000 crore in food and FMCG business revenue by FY27, up from ₹6,000 crore in the past 12 months, according to the company. Growth will be driven by aggressive distribution, expansion and portfolio scale-up, particularly in staples like wheat flour, pulses, and basmati rice.
AWL’s new Gohana plant in Haryana will streamline basmati rice operations (fully operational by Q1FY26), reducing third-party reliance and improving supply-chain efficiency. The company expects market share gains in the next few quarters, particularly in e-commerce and modern trade, which drive 50% of branded basmati rice sales.
However, execution risks remain. Q3 saw an Ebitda loss of ₹32 crore in the food segment due to a ₹50 crore rice inventory write-down. Management remains confident in long-term profitability, but near-term margin pressures persist. Ebitda stands for earnings before interest, taxes, depreciation, and amortisation.
AWL’s direct retail reach, now at 820,000+ outlets, and e-commerce growth support Tops’ national rollout. Yet, challenges persist—branded edible oil sales, the company’s bread-and-butter business, are slowing and palm oil volumes saw a double-digit Q3 decline due to consumer downgrading.
Management expects edible oil volumes to recover by FY26 (after reporting 4% y-o-y volume growth in Q3FY25), targeting 8-9% growth, driven by price stability, rural demand revival and distribution gains.
With regulatory approvals still pending, including CCI clearance for Adani’s exit from AWL’s agribusiness, the company’s broader transformation remains a work in progress.
Meanwhile, the stock is down more than 15% so far in 2025, pressured by concerns over edible oil volume softness and margin headwinds. A sustained recovery hinges on AWL’s ability to accelerate FMCG growth while stabilizing its core business. Until then, investors are likely to stay in wait-and-watch mode.
