Patanjali Foods share price surges over 25% in three months; ’deploy buy on dips’ suggests analyst

Patanjali Foods share price has experienced a bullish trend for the past three months, resulting in a gain of more than 25%. Systematix Institutional Equities, a brokerage firm, has initiated coverage with a 'BUY' rating and set a target price of ₹2,259, indicating a potential upside of 25% from Tuesday's opening price of ₹1800.05 per share on the BSE.

In its report, the brokerage house expressed confidence that Patanjali Foods is expected to exceed ₹40,000 crore in revenue and achieve an 8.5% margin by FY27. The report also highlights the anticipation of the FMCG business contributing 41% of the revenue in FY27E, up from 30% in FY24.

The company is valued at 40 times the estimated earnings for the fiscal year 2026 by the brokerage house, representing a 20% 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 share price

Patanjali Foods stock price hit 52-week high on Monday's session at ₹1,844 apiece on BSE. Patanjali Foods share price today, touched an intraday high of ₹1,812.85, and an intraday low of ₹1,787. Ruchit Jain, Lead Research Analyst at 5paisa, stated that Patanjali Foods share price has recently formed a higher top-higher bottom structure and is thus in an uptrend. The 40 DEMA at 1650 is a good support for the near term. Traders can keep a buy-on-dip approach for this stock.

Key Growth Drivers

In its report, the brokerage mentioned that the company's growth is fuelled by being a pioneer and market leader in the branded textured soy protein sector, strengthened synergies with the company’s food and HPC portfolio, The strong promoter pedigree of the Patanjali group, Improvement of the high-margin premium food portfolio through the Nutrela brand, Speeding up growth in the high-margin nutraceuticals portfolio, and being present in mass, value, and premium market segments.

Company Overview

The company is a sizable, multifaceted multinational with a concentration on the FMCG and Fast Moving Health Goods (FMHG) markets. The firm operates 25 processing plants (19 of which are operating) around India and has access to 43 contract manufacturing units in addition to key manufacturing facilities.

The company has a good balance of upstream and downstream operations and is active throughout the palm and soya value chains. With a portfolio that is well-diversified, the firm serves a broad range of customer tastes and market trends across various income brackets within the retail industry.

Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decision.