Not ITC Or HUL, But This FMCG Stock Backed By Baba Ramdev To Rise 17% Ahead, Target Rs 1,644!

Brokerage Antique Stock Broking has recommended buy on 1 leading FMCG stock after this company reported Q4 earnings in line with estimates. A host of factors are likely to improve growth ahead, and accordingly, Antique has set a target price of Rs 1,644 with buy recommendation on the FMCG stock. Currently, this stock is trading around Rs 1,400 levels. And who is it? Its neither giants like ITC or HUL but rather a midcap stock backed by yoga guru, Baba Ramdev.

Drum roll! Its none other than Patanjali Foods.

On BSE, Patanjali shares trade at Rs 1400.60 apiece, marginally up with market cap of Rs 50,701.00 crore. The stock touched an intraday high of Rs 1,42 in the early hours.

The stock's 52-week high and low is at Rs 1,741.00 and Rs 910 apiece.

In Q4FY24, Patanjali reported a e total revenue from operations of Rs 8,221.66 crore. registering an increase of 3.93% over Q3FY24. The Food & FMCG segment achieved an ever highest quarterly revenue of Rs 2,704.61 crore. in Q4FY24 versus Rs 2,498.62 crore. in Q3FY24, achieving a growth of 8.24%. The Food & FMCG segment
accounted for 32.57% of total revenue from operations in the current quarter.

For FY24, the company achieved a total revenue of Rs 31,721.35 cr. from its operations. Within
this, sales from the Food and FMCG segment amounted to Rs 9,643.32 cr. The proportion of revenue contributed by the Food & FMCG segment to the total revenue from operations rose to 30.06 % in FY24 from 19.49% in FY23.

While the company achieved EBITDA of Rs 496.98 cr. in Q4FY24 with EBITDA from operation margin of 6.04%. In FY24, EBITDA stood at Rs 1,518.82 crore. with EBITDA from operations margin of 4.79%.

The quarterly PAT was at Rs 206.32 cr. vs Rs 216.54 cr. in Q3FY24 and Rs 263.71 cr. in Q4FY23 and the PAT margin in the quarter was 2.47% vs. 2.72% in Q3FY24 and 3.31% in Q4FY23. For FY24, the PAT was Rs 765.15 cr. with 2.39% PAT margin.

In its brokerage note, Anqtique's note said, "We expect a gradual recovery in Food & FMCG margin driven by
mix improvement and operating leverage. Sequentially, oil business performance improved with revenue/ EBITDA growing 2%/ 25% QoQ and EBITDA margin improving 44 bps to 2.4%, which should continue. Food & FMCG business performance is expected to sustain with management focus on driving growth with distribution expansion and new product launches."

Further, the brokerage added, "ost the 4QFY24 performance and lower than expected margin in the Food & FMCG business, we have cut our EPS estimates by 13%/ 7% for FY25/ 26. We expect improvement in performance driven by a) Premiumization of portfolio, b) Higher contribution from superior margin FMCG business, c) Operating leverage and synergy benefits from PAL distribution, and d) Better cost control.

Accordingly, Antique's note said, "We maintain BUY recommendation with a revised target price INR 1,644 (previously INR 1,765) based on 30x PER on FY26E EPS."

From the current market price, this will be a potential upside of over 17% in Patanjali Foods going ahead.

Disclaimer: The recommendations made above are by market analysts and are not advised by either the author nor Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.