Anil Singhvi says buy Patanjali Foods shares for 2 years; here is why

Patanjali Foods shares traded lower on Wednesday (July 2) after Patanjali Ayurved to sell home, and personal care business to group firm Patanjali Foods for Rs 1,100 crore. 

At around 11:17 a.m., shares of Patanjali Foods traded 0.64 per cent or Rs 10.8 lower at Rs 1688.85 apiece on BSE.  

Baba Ramdev-led Patanjali Ayurved has decided to sell its home and personal care business to listed group firm Patanjali Foods Ltd for Rs 1,100 crore.

The acquisition will help edible oil firm Patanjali Foods to become an FMCG company.

In a regulator filing, Patanjali Foods informed that the board has approved the "acquisition of the entire non-food business undertaking..e Hair care, skin care, dental care, and home care carried out by Patanjali Ayurved, including but not limited to all movable assets, immovable properties, contracts, licenses, books and records, employees and certain assumed liabilities of PAL through a slump sale arrangement on a going concern basis".

Anil Singhvi view on Patanjali Foods 

Zee Business Managing Editor Anil Singhvi has recommended buying shares of Patanjali Foods with a stop loss of Rs 1,680 and for targets of Rs 1,740, Rs 1,755, and Rs 1,765 apiece. 

He has further suggested holding the shares for two years giving big targets at Rs 2,500, Rs 3,000, and Rs 3,600.

As per Singhvo, the company's move to acquire the non-food business from promoters for Rs 1,100 crore is a good move to bring all the brands under the listed flagship company.

Singhvi added that the deal has taken place at extremely reasonable valuations and thus is great news for existing Patanjali shareholders.

"This business can be valued at around Rs 10,000-15,000 crore but sold only at Rs 1,100 crore considering the stock in hand and the value of plants effectively business transferred at zero value," Anil Singhvi said.

Patanjali Foods share price: Past performance 

In a year, shares of Patanjali Foods have given returns of over 41 per cent against Nifty50's rise of over 25 per cent.

(With inputs from agencies.)

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