Patanjali Foods shares ended flat at Rs 601 on the NSE on Tuesday, but the stock is attracting attention after global brokerage Jefferies raised its price target to Rs 695, maintaining a ‘buy’ rating. The brokerage cited several positive factors, including recovering edible oil sales, rising festive season demand, and steady margin expansion across key business segments.
Jefferies’ target scenarios for Patanjali Foods
Jefferies outlined three potential outcomes for the stock. In its base-case scenario, revenue is expected to grow at 9 per cent CAGR over FY25-28, with 90-basis-point margin expansion, translating into 19 per cent EPS growth and a target of Rs 695. The upside case projects 10 per cent revenue CAGR with 130-basis-point margin expansion, targeting Rs 760, while the downside case estimates 5 per cent revenue CAGR and a valuation of Rs 480.
Jefferies says Patanjali Q1 weakness likely temporary
Jefferies noted that Patanjali Foods experienced a slowdown in the first quarter, largely due to the government’s customs duty cut on crude edible oil. This led to trade de-stocking and inventory valuation adjustments, impacting near-term sales. “With this headwind now behind, Patanjali is well-positioned for a stronger performance in the upcoming quarters,” the report said.
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Festive season to drive consumer sales
The brokerage highlighted that the ongoing festive season could provide a significant boost to consumption, especially in staples, ghee, and ayurvedic products. While the edible oil business may see only modest single-digit volume growth over the medium term, demand across other product categories is expected to remain healthy.
Growth across food and personal care segments
Patanjali’s foods business, which includes ghee, biscuits, soya chunks, and ayurvedic supplements, is projected to recover gradually through FY26, with management targeting 10 per cent topline growth and 8–10 per cent margins. Meanwhile, the home and personal care segment, integrated post the November 2024 acquisition, is expected to grow at a 15 per cent CAGR, with potential margin expansion of around 200 basis points.
The company’s palm plantation business has expanded from 60,000 hectares in March 2022 to over 92,000 hectares. As these plantations mature, Jefferies expects mid-to-high teen EBITDA margins, providing additional long-term support to profitability.
GST cuts to encourage volume growth
Recent GST reductions on key product categories such as ghee, biscuits, toothpaste, soya chunks, soaps, and face wash are likely to drive higher demand and sales volumes. While near-term de-stocking could slightly affect results, the overall medium-term outlook remains positive.
