Global broking firm Jefferies initiated coverage on Patanjali Foods with a bullish 'buy' call, as the firm as evolved into a diversified consumer franchise.
Jefferies gave Patanjali Foods a target price of Rs 2,050 per share, which indicates a 19 percent upside from the previous session's closing price.
Among the reasons for bullishness, Jefferies noted that while Patanjali Foods has diversified its portfolio, the firm is also scaling up organically and through acquisitions of margin-accretive portfolios from parent.
Patanjali Foods' higher-margin segments such as Foods and home & personal care accounts for around 60 percent of the firm's EBITDA, while accounting for over 70 percent of the SoTP value of Patanjali's shares.
The brokerage expects the firm to deliver high single-digit topline growth, coupled with margin expansion going ahead. Over the past 12 months, shares of Patanjali Foods have jumped around 20 percent in trade, while the benchmark Nifty 50 index has risen a mere 1.6 percent.
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On March 13, Adar Poonawalla-owned Sanoti Properties has decided to sell its stake in its insurance subsidiary Magma General Insurance to Baba Ramdev's Patanjali Ayurved and other entities.
Post the sale, Baba Ramdev's Patanjali will control a 98 percent stake - valued at Rs 4,500 crore as per the transaction - in the insurance company. The Dharampal Satyapal Group (DS Group), with presence in food and beverages, dairy and hospitality, among others, is the other prominent buyer.
Adar Poonawalla, Chairman, Serum Institute of India said the company had registered a growth rate of 26 percent over the last five years. "We are confident that it will continue to make a strong contribution to the general insurance industry under the new ownership of Patanjali Ayurved and the DS Group," he said.
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