Systematix Institutional Equities has issued a BUY rating for Patanjali Foods with a target price of ₹660, representing a potential upside from the current market price of ₹486.95. According to the broker's analysis, the stock is valued at a P/E ratio of 36x on December-2027E EPS, which is approximately 15% discount to FMCG peers' FY28E average. The recommendation is based on the company's strong fundamentals and growth prospects in the food and FMCG sector.
During a recent facility visit to Patanjali Foods' Haridwar facility, management provided a cautiously optimistic commentary about market conditions. As reported by Systematix, the ongoing conflict in West Asia has not impacted spot prices of edible oils, which constitute approximately 70% of revenue. However, futures prices in Chicago vegetable oils have increased, with management indicating a high correlation between crude oil (up 12% quarter-on-quarter in Q4FY26 so far) and edible oils. The company expects prices of edible oils and biscuits to move higher due to these trends, with cost inflation being largely pass-through.
The broker highlights the favourable turn in foods' growth across biscuits, staples and ethnic foods as a key positive development. According to Systematix analysis, this growth is being driven by Patanjali Foods' expanding distribution network and the launch of premium variants. The company is expected to achieve FY25-28E sales CAGR of 7.5%, demonstrating consistent growth momentum. Despite cost pressures, the company has maintained double-digit sales growth through its pricing power and brand equity, having successfully leveraged these strengths even during earlier cost-upcycle periods.
While near-term margin outcomes remain monitorable, Patanjali Foods is positioned for superior blended margins over FY26E-28E period. As reported by Systematix, the revenue contribution of FMCG products is estimated to expand from 7% in FY22 to approximately 32% in FY28E. This shift toward higher-margin FMCG products is expected to support the company's overall profitability trajectory and margin expansion over the medium term. The company's ability to maintain double-digit sales growth despite cost inflation demonstrates its pricing power and brand strength in the competitive FMCG market.
