Patanjali Foods, a top FMCG and edible oil firm in India, has recently found itself in investor limelight after a fresh rating update from ICICI Securities. The brokerage firm has given an ‘ADD’ rating to the stock with a target price of ₹2,100 — indicating a 15% increase from its closing price of ₹1,833.70 on Tuesday. The hope is despite Wednesday’s session seeing the stock trade lower and being just about 10% away from its 52-week high of ₹2,030.
As of 11:04 AM on Wednesday, Patanjali Foods traded at ₹1,818.75, down intraday by 0.82%. It even touched a low of ₹1,804.45 early in the day. But ICICI Securities is optimistic, calling out better business fundamentals, a stronger FMCG play, and increased profitability visibility.
The Bullish Call: What’s Behind It?
ICICI Securities feels that the emergence of Patanjali Foods as a general FMCG titan from a largely edible oil player already began and is yielding results.
“We anticipate the performance of Patanjali to improve as the acquisition of FMCG businesses will stand to benefit it in stabilising the overall performance,” the report stated.
According to the brokerage, the FMCG segment — including food products and home & personal care (HPC) — offers much better pricing power and more stable margins compared to the volatile edible oil segment. This shift is key to Patanjali’s evolving growth strategy.
From Oil to FMCG: A Strategic Pivot
Patanjali’s roots have long been in the edible oil sector. While this business remains valuable, the volatility in raw material costs and regulatory pressures often weigh on margins. That’s where FMCG steps in.
ICICI Securities also estimates the company’s revenue, EBITDA, and net earnings to increase at a compound annual growth rate (CAGR) of 11%, 18%, and 21%, respectively, over FY25-27. Much of this growth will come from the FMCG business.
In numbers:
FMCG revenue share is likely to increase from 28% in FY25 to 34% by FY27.
Contribution from FMCG towards profitability is expected to rise from 44% to 62% during the same period.
This means edible oils will continue to have a role, but the future of Patanjali Foods will be dominated by its FMCG plans.
Recent Acquisitions and Strategic Initiatives
ICICI Securities also pointed to the significance of Patanjali Foods’ recent acquisitions. These are:
Patanjali Ayurved’s food business, which it acquired in FY23.
The HPC (Home & Personal Care) business, which was acquired in FY25.
These acquisitions not only introduce revenue-generating categories but also release new efficiencies via distribution synergies, premiumisation, and brand equity. As per the brokerage, these assets will make Patanjali widen margins and consolidate cash flows.
“Strong brand equity, distribution synergies, and a sharp focus on premiumisation” are likely to be major value drivers, the report further added.
Edible Oil Still Matters
While FMCG is making headlines, the business of edible oils isn’t being left behind. ICICI Securities continues to believe that this category continues to represent long-term value even amid near-term margin stress.
Some of the important highlights are as follows:
4–5% volume growth is anticipated, supported by growing premium products and diversification into palm oil plantation.
Return on Capital Employed (RoCE) for the oil business is estimated in the 15–20% band, and hence it is a profitable segment in the long term.
Therefore, the strength of the company is in balancing traditional edible oil businesses with an increasing FMCG portfolio.
Dividend Update: Small but Steady
In a regulatory filing dated August 4, Patanjali Foods declared a final dividend of ₹2 per share for FY25. While modest, the dividend reflects consistent shareholder rewards and hints at improving financial health.
Broader Market Context
Patanjali’s share performance in recent months has been underwhelming. After touching a 52-week high of ₹2,030, the stock has slipped by nearly 10%, partly due to volatile commodity prices and concerns about consumer demand.
But ICICI Securities analysts feel that this slide is a buying opportunity, given that the payoff from the company’s strategic transitions would start to be visible in the bottomline over the next two years.
Patanjali Foods is going through an enormous business makeover — from legacy edible oil behemoth to a full-fledged FMCG behemoth. ICICI Securities’ 15% upside estimate is founded on a strong base of earnings growth, margin growth, and strategic acquisitions.
Though the stock could be lagging for now, the long-term scenario is much brighter. With a well-defined path towards higher profitability and increased FMCG orientation, Patanjali Foods could be just getting started with its next phase of growth.
