Patanjali Foods: Edible Oil Prices Rise Amidst Geopolitical Tensions

Patanjali Foods (PFL) has provided a cautiously optimistic outlook, noting that ongoing West Asian conflicts have not yet affected spot prices for edible oils, which constitute about 70% of its revenue. However, Chicago vegetable oil futures have increased, with management observing a strong correlation between crude oil and edible oil prices.

Despite rising costs, PFL has successfully leveraged its pricing power and brand strength to achieve double-digit sales growth. This resilience is supported by favorable growth across its food segments, including biscuits, staples, and ethnic foods. Expansion of its distribution network and the introduction of premium product variants are key drivers for this performance.

PFL anticipates superior blended margins between FY26E and FY28E. This expectation is based on the projected expansion of its FMCG products' revenue contribution, which is estimated to grow from 7% in FY22 to approximately 32% by FY28E. The company maintains a BUY rating with a target price of ₹660.