Patanjali Foods Ltd. got a 'buy' rating as Jefferies initiated coverage on the stock, as it sees near double-digit growth and margin expansion for the firm. The brokerage gave a target price of Rs 2,050 apiece, which implied 19.9% upside from Thursday's closing price.
Patanjali Foods' focus on distribution, premiumisation, and brand building will help the company deliver double-digit growth, according to the brokerage.
Patanjali Foods is likely to grow revenue at 10-11% CAGR over financial year 25-27e, with over 100-basis points margin expansion led by home and personal care acquisitions, Jefferies said. This would enable a 20-24% Ebitda and earning per share CAGR over FY25-27. Nutrela, Sunrich, and Doodh complement flagship 'Patanjali' brand, the brokerage said.
Patanjali Foods has diversified its business beyond edible oils; its foods, home and personal care portfolio is now 35% of the revenue. Higher margin of foods, home, and personal care is now 60% of Ebitda, Jefferies said.
Patanjali Foods is the second top player in India's edible oil industry. Its volume grew steadily over financial years 2022-24, but profitability was volatile due to commodity fluctuations, albeit has recovered in financial year 2025, Jefferies said. Edible oil is a low-growth industry, but there's ample opportunity to gain market share as 25% of the industry is still unorganised. While, the organised sector is too fragmented, the brokerage pointed out.
Over FY22 and FY24, Patanjali Foods' portfolio has grown due to organic growth and merger and acquisition. "We forecast near-double-digits revenue growth with 10% Ebitda margin in the medium term," Jefferies said.
Patanjali Foods holds the fourth position in the oral care industry. It aims to further scale-up in home, skin and hair care. Jefferies is expecting a 15% CAGR over FY25-27 period in home and personal care category.
The business is also growing organically through acquisition of margin-accretive portfolios from the parent Patanjali Ayurveda at an attractive valuation, the brokerage said.
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