Patanjali Foods (PATANJALI)

FairStock Score: 58/100 — STEADY

Score breakdown: P/E: 0/3 · ROCE: 1/2 · Growth: 2/2 · Dividend: 0/1

Key Financials

Strengths

• Strong balance-sheet safety: Debt/Equity of 0.24 and Altman Z-Score of 5.74.
• Decent profitability: ROE 14.50%, ROCE 15.55%, and latest quarter net profit ₹594 Cr.
• Good operational health signal: Piotroski F-Score 7/9.
• High promoter holding of 68.26% aligns long-term ownership.
• Recent momentum: sales growth 19.59% and profit growth 31.76%.

Concerns

• Valuation is far above intrinsic estimates: Graham Number ₹193.50 and DCF intrinsic value ₹79.75 vs price ₹469.25.
• Long-term growth is weak: 5-year revenue CAGR only 2.47%, making recent growth look cyclical or commodity-driven.
• Expensive multiple: P/E 32.90, EV/EBITDA 50.80, and PEG 1.77 offer no margin of safety.
• Low cash generation: FCF ₹183 Cr against a market cap of ₹55,266 Cr; dividend yield just 0.66%.

AI Analysis

At ₹469.25, Patanjali Foods is being priced like a high-growth consumer franchise. But a value investor must separate price from value. The five-year revenue CAGR is only 2.47%, which tells me the long-term growth story is far less exciting than the recent 19.59% sales growth and 31.76% profit growth suggest. Edible oil is a competitive, low-margin, largely commoditized business; brand and distribution help, but they are not a wide moat. Financially, the company is sound: debt-to-equity is just 0.24, Altman Z-Score is 5.74, and Piotroski F-Score is 7 out of 9. ROE of 14.50% and ROCE of 15.55% are respectable, but they are hardly exceptional. The problem is valuation. At a P/E of 32.90 and P/B of 4.49, the market is paying for strong future growth. Meanwhile, the Graham Number is ₹193.50 and the DCF intrinsic value is ₹79.75. Even allowing for conservative assumptions, ₹469.25 offers no margin of safety — indeed, it is far beyond any Graham-style calculation. EV/EBITDA of 50.80 is expensive, and free cash flow of only ₹183 Cr against a market cap of ₹55,266 Cr is negligible. The latest quarter, with ₹10,484 Cr in sales and ₹594 Cr in net profit, is decent, but one quarter does not change a five-year CAGR of 2.47%. A 0.66% dividend yield provides little downside protection. This is a steady, adequately-managed slow grower, but at this price the risk-reward is unfavorable. In Buffett's words, it is a wonderful business? No — it is a fairly ordinary business at an extraordinary price. I would wait for a much lower price or a clear, sustained acceleration in cash earnings before investing. For now, discipline says pass.

Data from BSE/NSE filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer