Patanjali Foods share price has experienced a bullish trend for the past three months, resulting in a gain of more than 25 per cent. The scrip gained over 3 per cent to hit a fresh record high on August 21. There is interest in the stock as Systematix has initiated coverage on it with a ‘Buy’ rating and a target price of Rs 2,259, implying a potential upside of 24 per cent from the previous closing price.
In its coverage initiation, the brokerage highlighted Patanjali Foods’ aggressive palm oil plantation strategy within its edible oils business. “Patanjali is poised to leverage the strong premiumisation drive in its foods business, it said.
The brokerage also emphasised the upcoming addition of a high-margin HPC (Home and Personal Care) segment, which is expected to create multiple synergies. “There is a large distribution expansion opportunity, especially in alternate channels,” Systematix said.
The company is valued at 40 times the estimated earnings for the fiscal year 2026 by the brokerage house, representing a 20 per cent discount compared to its FMCG peers who trade at an average PE ratio of 50 times the estimated earnings for the fiscal year 2026.
Systematix anticipates that the company will achieve outstanding growth within the FMCG sector, driven by both expanding its product range and distribution network. Improvement in margins and return ratios is expected to continue as the contribution from FMCG and premium products increases.
Key risks to their assessment include volatility in edible oil prices, challenges in integrating the HPC business, and potential difficulties in executing the planned growth and margin strategies, including obtaining necessary regulatory approvals.
Patanjali Foods reported that its net profit had nearly tripled to Rs 263 crore in Q1FY25. The same stood at Rs 88 crore in the same quarter last year. Its revenue from operations, however, declined 8 per cent year-on-year (YoY) to Rs 7,173 crore in the June quarter, compared with Rs 7,767 crore a year ago.
At 10:20 am, Patanjali Foods shares were trading 3.4 per cent higher at Rs 1,884.55 on the National Stock Exchange (NSE). So far this year, the stock has gained 20 per cent, beating benchmark Nifty’s returns of around 13 per cent during this period. In the 12 months gone by, the counter has rallied 44 per cent compared to 27 per cent rise in Nifty.
Comments
0 comment