Patanjali Foods shares looking at 17 per cent upside after spate of corrections: Analyst — Check target price

Stock to Buy: Patanjali Foods Limited’s shares jumped 3 per cent on the NSE on Monday, riding on strong Q3 numbers posted by the company last week. This was after a spate of corrections witnessed by Patanjali Foods share. The stock fell by over 24 per cent between 24 January and 3 February.

Today the stock ended at Rs 938.90, up by Rs 27 from the Friday closing price.  

Source: NSE

Patanjali Foods: Q3 Results 2023

In the backdrop of better sales, this fast moving consumer goods company has posted a 15 per cent growth in its net profit to Rs 269.18 crore for the December quarter. Total income rose by 26 per cent to Rs 7,963.75 crore during the quarter ended December 31, as compared to Rs 6,301.19 crore in the corresponding period of the previous year.

Patanjali Foods, which is mainly into edible oil business, reported a net profit of Rs 234.07 crore in the year-ago period, according to a regulatory filing.

During the April-December period of this fiscal, in the nine-month period ended December 31, 2022, net profit increased to Rs 622.73 crore from Rs 571.87 crore a year ago, said Patanjali Foods, which is part of Baba Ramdev-led Patanjali Ayurved.

Total income rose to Rs 23,858.50 crore in the first nine months of this fiscal year from Rs 17,608.18 crore in the previous year.

The company is positive on the business outlook while expressing confidence over improvement in margins.

The company gained on improvement in edible oil prices. Its food business accounts for 20 per cent of the overall business.

Over the next 5 years, the company has a target of taking it to 50 per cent. In FY24, the company hopes to earn Rs 6,000 crore from its food business with profit margins between 15 and 18 per cent.

Patanjali Foods also expects its margins to improve in the edible oil segment. It is targeting between 3-5 per cent in FY24.

The company has shown strong momentum in its international business as well.

Patanjali Foods Share History

Patanjali Foods shares have outperformed Nifty50 by over 10 per cent in the 1-year period. It has given returns of 11.7 per cent during this period as against 1.2 per cent returned by the broader market index, according to data sourced from Trendlyne.

At 17.6, the RSI (Relative Strength Index) for this counter indicates that the stock is in highly oversold territory. A number below 20 suggests that the stock is oversold, while it is overbought at levels above 70. Another momentum indicator MFI is at 27.8. A number below 30 indicates that the stock is in oversold zone.

The Patanjali stock has been relatively volatile and has traded with a 1-year Beta of 1.2. It is trading at a Price-to-Book value of 6.96 which is below the industry median, Trendlyne data says.

Buy: Patanajali Foods | Upside: 17%

Notwithstanding the current weakness, one can expect a further pullback in Patanjali Foods share price, technical analyst Nilesh Jain said. The scrip has corrected significantly over 5-6 trading sessions and is now available at opportune levels for investors to make an entry with trading and positional buying perspective, he said.

Intraday Chart

Patanajali Foods Shares Target Price: 

Jain, who is Assistant Vice President - Lead Derivative and Technical Research at Centrum Broking, recommends a 'Buy'. The stock is expected to hit levels of Rs 1,000 in the near term. Over a positional term, it has a potential upside up to Rs 1,100, Jain further said.

He puts the stop loss at Rs 890.

Inputs from Nupur Jainkunia

(Disclaimer: The views/suggestions/advises expressed here in this article is solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.)