What explains the solid rally in Adani Wilmar post listing?

Adani Wilmar had a tepid listing on 08th February. However, the stock picked up smart momentum in the coming days. On the day of listing on 08-Feb, Adani Wilmar listed at Rs.227 i.e. below the IPO price of Rs.230. However, by the end of the day, had touched Rs.268, gaining 16.63% over the IPO price and 18.17% over the listing price on Tuesday. However, that was just the beginning of the frenetic rally in the stock.

On 09th February and 10th February, Adani Wilmar closed at 20% upper circuit on both days. It closed at Rs.321.90 on 09-Feb and at Rs.386.25 on 10-Feb. within just 3 days, the stock of Adani Wilmar gave stupendous returns of 67.93% over the IPO price and 70.15% over the listing price. On 11-Feb the stock touched a high of Rs.419.90 but then corrected to close lower at Rs.381 levels. However, the returns are still stunning.

What triggered this sharp rally in Adani Wilmar. Firstly, the stock was priced reasonably for its reach and valuations. Also, it was the cheapest among the listed FMCG plays in the market. Thirdly, there was boredom in the market with the slew of digital names trading at a discount to issue prices and old economy was suddenly preferred. With an established franchise and a solid profit record, Adani Wilmar was still reasonable for investors.

Some interesting points that you must know here. The stock traded volumes of 550 lakh to 850 lakh shares on these days with Friday turnover at all time high levels. However, delivery percentage has fallen from 44% to 23% indicating too much of speculative volumes on the counter. Adani Wilmar market cap is now above Rs.50,000 crore and it is the seventh Adani group company to list on the bourses.