Patanjali Foods - Remodelling As A Formidable Competitor To Its FMCG Peers; Systematix Initiates With A Buy

NDTV Profit’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer NDTV Profit’s subscribers an opportunity to expand their understanding of companies, sectors and the economy..Systematix Research Report.We initiate coverage on Patanjali Foods Ltd. with a Buy rating and target price of Rs 2,259 valuing the company at 40 times FY26E price/earning, at 20% discount to FMCG sector average..Patanjali Foods is set to become a key player in India’s FMCG market post acquisitions. First, it acquired the erstwhile Ruchi Soya followed by acquisition of biscuits, breakfast cereals business, the foods business and eventually the home and personal care businesses of its parent, Patanjali Ayurved Ltd. which includes haircare, skincare, dentalcare, and homecare products. In addition to being a number two player in the edible oil market with market leadership in palm oil category and a large player in the oil palm plantation segment, the company has created a meaningful place in key categories like biscuits, oral care, cow ghee and other FMCG products. With the revenue contribution of FMCG products estimated to expand from 7% in FY22 to 41% in FY27E, we expect Patanjali Foods to command superior valuation multiples, in line with mid-sized FMCG peers with ~80% Ebitda contribution coming from that part of the business. The company’s strong brand equity and distribution network should boost its aggressive forays into emerging categories like nutraceuticals, spices, HPC, etc. We expect Patanjali Foods’ industry leading distribution led growth in core categories and robust margins in new premium categories to drive 10.3%/41.3%/48.9% CAGR in revenue/Ebitda/PAT, respectively, over FY24- 27E. .Click on the attachment to read the full report:.Adani Green Can Rally 75%, Says Jefferies As It Initiates Coverage With A 'Buy'.DISCLAIMERThis report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit..Users have no license to copy, modify, or distribute the content without permission of the Original Owner.

Patanjali Foods - Remodelling As A Formidable Competitor To Its FMCG Peers; Systematix Initiates With A Buy

Company's margins, return ratios would continue to improve as contribution from FMCG and premium products keeps rising, says the brokerage.

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