Can Patanjali reach its five-year goal?
Can Patanjali reach its five-year goal?
Who hasn’t heard of Patanjali, a manufacturer of everything from oils to toothpaste? The company is also present in the stock market via Patanjali Foods. This makes it possible for small-scale investors to join this corporation. The Patanjali Group includes Patanjali Foods, which operates in a number of industry sectors. The corporation operates 43 factories around the nation. It includes 25 processing facilities, 19 of which are active.
Ruchi Soya Industries used to be known as Patanjali Foods.
This company was purchased by Patanjali Group in September 2019 through the bankruptcy procedure for Rs 4,350 crore. It entered the food industry by paying Rs 60 crore in May 2021 for Patanjali’s biscuit, cookie, and rusk business. Ruchi Soya’s name was changed to Patanjali Foods in April 2022. The promoters currently own 80.82% of the company, but in order to meet SEBI’s requirements for minimum public shareholding, they will have to sell about 6% of their shares.
food industry
There are 242 goods total in the company’s 8 categories, including chawanprash, honey, and other things.
The company has items in the categories of general nutrition, multivitamins, and weight management. The second category is nutraceuticals & Wellness items. The business sells mass/muscle gainers and energy supplements under the heading of sports nutrition. The business offers medical nutrition solutions for diabetics, dialysis patients, bone health, anaemia, and more.
Plantations
The firm Oil Palm Plantation has a designated area of 6.23 lakh hectares, of which 62,102 hectares are used for agricultural. In 11 states, the business is collaborating with 44,026 farming households.
dietary oil
A notable producer of edible oils in the nation is Patanjali Foods. Its portfolio includes brands like Ruchi Gold, Mahakosh, Nutrela, Sunrich, and Ruchi Star.
Additionally, the corporation engages in oleochemicals and wind energy. It can produce 84.6 megawatts (MW) in total, spread over 6 states.
There are 4,763 distributors for the company nationwide, making for a robust distribution network. It is present in 457,788 retail locations around the country. 31 nations were receiving the company’s exports as of December 2020. In the wake of the COVID-19 outbreak, attention has been drawn more to healthcare items. Sales of the company’s goods are anticipated to rise as organised sectors and nationalism are given more attention. Vertical integration will improve technical expertise and make it possible to share the advantages of one section with other segments.
Efficiency, a drop in debt, and the smooth operation of every section collectively provide the impression that management is disciplined. The business’s decision-making process has been decentralised, which facilitates speedy judgements. It fosters solid bonds with its clients, staff members, small suppliers, and vendors.
Financial Results
Additionally strong is the company’s financial performance. Its earnings are steadily rising. The company made Rs. 806 crore in profit in FY22, and Rs. 886 crore in profit in FY23, an increase of 9%.
Patanjali has recently made headlines. It provided a five-year vision paper. which company has outlined a bold plan for the following five years. The corporation aspires to earn an operational profit of Rs 5,000 crore and Rs 50,000 crore in revenue. The business’ operating profit for FY23 was Rs 1,577 crore.
growth catalysts
Now let’s examine the company’s growth catalysts.
With brands like Ruchi Gold, Mahakosh, and Sunrich, the company has a strong presence in the edible oil sector, which will help it win market share from unbranded competitors as consumers turn more and more to branded goods. The price volatility of raw materials will decline as a result of backward integration.
Being present along the entire value chain will improve supply chain tracking. The palm plantation programme will improve relations by assisting farmers. and work to increase palm oil import reductions will strengthen ties with all parties.
Valuation
Let’s now examine corporate valuations. According to its FY24 profits, its PE ratio was 23.6, and for FY25 earnings, it was 20.4. Shares of the company are currently trading 27% below their 52-week high. The price per share on the market right now is roughly Rs 1100. The majority of brokers have rated the stock as a buy. Target prices have been set by ICICI Direct at Rs. 1,750 and Antique at Rs. 1,725.
Therefore, statistics imply that Patanjali is a fundamentally sound business. According to experts, investment in its stock will produce profitable results. But bear in mind that nothing in the stock market is guaranteed. Experts typically advise betting on a firm if its fundamentals are solid, its financial performance is encouraging, and its values are alluring.
