Motilal Oswal has issued a bullish recommendation on Prataap Snacks (PSL) with a buy rating and target price of ₹1,350. According to Motilal Oswal's research report dated August 02, 2026, the brokerage maintains its positive outlook on the snacks manufacturer based on strong operational performance and growth prospects. The target price is derived using a DCF-based valuation methodology, implying an implied P/E ratio of 45x on March 2028 estimates.
Prataap Snacks delivered robust financial results in Q1FY27, with revenue growing 20% year-on-year to ₹5 billion. As reported by Motilal Oswal, namkeen snacks outperformed with double-digit volume growth, followed by potato chips and extruded snacks. Management has projected double-digit revenue growth over FY27, supported by higher growth in namkeen products and extruded snacks. The company's diversified product portfolio across different snack categories has contributed to this strong performance.
Gross margin contracted 138 basis points year-on-year to 27.2% in Q1FY27 due to higher cost of raw materials, according to Motilal Oswal's analysis. EBITDA margin settled at 4.1%, declining 35 basis points year-on-year. The margin compression was primarily attributed to increased palm oil and packaging costs, which rose 20% year-on-year. Despite current challenges, the brokerage expects margins to expand to 7-8% by FY28 through cost optimization initiatives and calibrated price increases.
Mr. Arvind Kumar Mehta has resigned from his position as Chairman and Executive Director of PSL. Additionally, the board has approved the acquisition of RLOP Food Processing for a cash consideration of up to ₹165 million. As reported by Motilal Oswal, this acquisition will enable PSL to secure leasehold land for greenfield expansion, supporting the company's growth strategy. The brokerage expects PSL's revenue growth to continue at 12-13% driven by strategic initiatives including distribution model shift to two-tier, plant consolidation, and expansion in East India.
