Jefferies, a global broking firm, has initiated coverage on Patanjali Foods with a positive ‘buy’ rating, highlighting its transformation into a diversified consumer franchise.

The brokerage has set a target price of ₹2,050 per share, suggesting a potential 19% upside from the last session’s closing price. 

As of 11:00 AM IST, Patanjali Foods’ share price was trading at ₹1,725.55, reflecting a 0.40% increase from its previous close.

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Growth Drivers and Strategic Positioning

Jefferies’ optimism stems from the company’s strategic diversification, along with its organic growth and acquisitions of high-margin portfolios from its parent company. Patanjali Foods, which was earlier focused primarily on edible oils, has expanded its portfolio to include a range of high-margin consumer products. The firm’s entry into segments such as packaged foods, home care, and personal care has positioned it as a key player in India’s fast-moving consumer goods (FMCG) sector.

Higher-margin segments, including Foods and Home & Personal Care, contribute approximately 60% to its EBITDA while representing over 70% of its SoTP (sum-of-the-parts) valuation. This shift towards a higher-value product mix is expected to support sustained profitability and margin expansion in the coming years.

The brokerage anticipates that the company will achieve high single-digit revenue growth, alongside improved operating margins. Over the past year, Patanjali Foods’ stock has surged by around 20%, significantly outperforming the Nifty 50 index, which has gained only 1.6% in the same period. This strong performance reflects growing investor confidence in the company’s long-term strategy.

Expansion Through Acquisitions and Market Growth

Patanjali Foods’ parent company, Patanjali Ayurved, has been actively expanding its footprint through acquisitions, which has further strengthened the company’s position in the consumer market. The firm has strategically acquired businesses that complement its existing portfolio, allowing it to scale efficiently.

Meanwhile, on March 13, Adar Poonawalla-owned Sanoti Properties announced its decision to divest its stake in Magma General Insurance to Baba Ramdev’s Patanjali Ayurved and other investors. Following the transaction, valued at ₹4,500 crore, Patanjali Ayurved will hold a controlling 98% stake in the insurance firm, alongside the Dharampal Satyapal (DS) Group, a key player in the food, beverages, dairy, and hospitality sectors.

The Future of Patanjali Foods

Patanjali Foods’ expansion beyond FMCG into financial services indicates its broader ambitions. The acquisition of Magma General Insurance marks the company’s entry into the insurance sector, which could open new avenues for growth. Industry analysts believe that Patanjali Ayurved’s strong brand recognition and extensive distribution network could help drive the insurance business’s growth in rural and semi-urban markets, where Patanjali has a significant presence.

Adar Poonawalla, Chairman of Serum Institute of India, highlighted that the company had recorded a 26% growth rate over the past five years. He expressed confidence that under the new ownership of Patanjali Ayurved and the DS Group, the firm would continue making a significant impact in the general insurance industry.

With a strong brand, diversified portfolio, and strategic acquisitions, Patanjali Foods is well-positioned to sustain its growth trajectory and deliver value to investors.