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    HDFC Securities: Patanjali Foods can become large FMCG-wellness brand

    HDFC Securities: Patanjali Foods can become large FMCG-wellness brand

    HDFC Securities: Patanjali Foods can become large FMCG-wellness brand
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    By Nishtha Pandey   IST (Published)

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    Patanjali Foods stock price has gained over 60 percent so far this year and domestic brokerage HDFC Securities is of the view that yoga guru Ramdev's firm can transform from a commodity-based company to a large FMCG & wellness brand.

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    Buy / Sell Patanjali Foods share

    HDFC Securities has initiated coverage on Patanjali Foods Limited (erstwhile Ruchi Soya) with a ‘buy’ rating with a target price of Rs 1,602. The brokerage firm has suggested that investors can look to buy the stock with a time horizon of two to three quarters.
    “The powerful competitive edge which Patanjali Foods Ltd gets from parentage given its strong brand equity, pan-India distribution network, capabilities and product synergies has been further enhanced by the company’s acquisition of Patanjali’s complete foods portfolio. Over the medium term, we expect the company to witness a transformation from a commodity-based company to a large FMCG & Wellness company,” said HDFC Securities
    Shares of Patanjali Foods touched an intraday high of Rs 1,374.9 up by 2.38 percent from the previous close on the BSE. At 11:00 am, shares of the company were trading at Rs 1,360, up by 1.2 percent from the previous close on the BSE.
    In the year so far, the stock has gained over 60 percent. Adding to that yoga expert and entrepreneur Baba Ramdev will announce initial public offering (IPO) plans for five of his Patanjali group companies at a press conference on Friday, September 16. Ramdev intends to launch five new IPO over the next five years.
    In 2019, Patanjali Ayurved acquired Ruchi Soya for Rs 4,350 crore through an insolvency process. In June 2022, Ruchi Soya Industries' name was changed to Patanjali Foods, after the company acquired parent Patanjali Ayurved's food business for Rs 690 crore.
    Since Patanjali’s takeover of Ruchi Soya in 2019, the company’s margins have improved from 1 percent to 6.1 percent in the financial year 2022. Going ahead, on account of increasing contribution from the foods business and with the better realisation of synergies, we expect 46 basis points margin expansion over FY22-24, said HDFC Securities in a note.
    According to HDFC Securities, Patanjali Foods' march to becoming a diversified FMCG player has accelerated after the acquisition of the food business.
    For the April-June quarter, Patanjali Foods reported a standalone total income of Rs 7,370.08 crore, up 39.16 percent from Rs 5,295.99 crore in the corresponding period a year ago. The Company reported a net profit after tax of Rs 241.26 crore in the quarter that ended June 2022.
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