Target: ₹660
CMP: ₹486.95
The management of Patanjali Foods (PFL) issued a cautiously optimistic commentary during our recent visit to its facility at Haridwar. It emphasized that the ongoing conflict in West Asia has not impacted spot prices of edible oils (c.70 per cent of revenue) so far. However, futures’ prices in Chicago vegetable oils have increased — the management indicated high correlation between crude oil (c.+12 per cent quarter on quarter in Q4FY26 so far) and edible oils. We believe prices of edible oils and biscuits (containing refined palm oil) are likely to move higher on the back of these trends. Cost-inflation in edible oils is largely pass-through.
While costs have started looking up, PFL has leveraged its pricing power and brand equity in maintaining double-digit sales growth despite sharp pricing in the earlier cost-upcycle. The favorable turn in foods’ growth across biscuits, staples and ethnic foods is a key positive; we believe growth is being driven by PFL’s expanding distribution network and the launch of premium variants – we expect FY25-28E sales’ CAGR of 7.5 per cent.
While near-term margin outcomes remains a monitorable, with the revenue contribution of FMCG products estimated to expand from 7 per cent in FY22 to c.32 per cent in FY28E, we expect PFL to garner superior blended margins over FY26E-28E.
We maintain our BUY rating with TP of ₹660, valuing the stock at P/E of 36x on December-2027E EPS (at a c.15 per cent discount to FMCG peers’ FY28E average).
Published on March 17, 2026