PATANJALI - Investment Analysis: Buy Signal or Bull Trap?
Back to ListInvestment Rating: 3.2
| Stock Code | PATANJALI | Market Cap | 54,933 Cr. | Current Price | 506 ₹ | High / Low | 671 ₹ |
| Stock P/E | 38.5 | Book Value | 111 ₹ | Dividend Yield | 0.66 % | ROCE | 15.6 % |
| ROE | 12.1 % | Face Value | 2.00 ₹ | DMA 50 | 538 ₹ | DMA 200 | 569 ₹ |
| Chg in FII Hold | -1.42 % | Chg in DII Hold | 1.19 % | PAT Qtr | 517 Cr. | PAT Prev Qtr | 180 Cr. |
| RSI | 38.1 | MACD | -14.2 | Volume | 20,76,960 | Avg Vol 1Wk | 32,48,197 |
| Low price | 480 ₹ | High price | 671 ₹ | PEG Ratio | 2.22 | Debt to equity | 0.24 |
| 52w Index | 13.4 % | Qtr Profit Var | 67.2 % | EPS | 13.1 ₹ | Industry PE | 23.2 |
📊 Analysis: Patanjali trades at ₹506 with a P/E of 38.5, higher than the industry average of 23.2, suggesting overvaluation. Fundamentals are moderate with ROE at 12.1% and ROCE at 15.6%, showing average capital efficiency. EPS of ₹13.1 is modest, and PEG ratio of 2.22 indicates expensive valuation relative to growth. Dividend yield of 0.66% provides limited income support. Debt-to-equity is low at 0.24, showing manageable leverage. Quarterly PAT surged to ₹517 Cr. from ₹180 Cr., reflecting strong short-term growth. Technicals are weak (RSI 38.1, MACD negative, trading below DMA 50 & 200), indicating bearish momentum. Overall, Patanjali is a fair candidate for medium-term investment but not highly attractive for long-term compounding at current valuations.
💡 Entry Price Zone: Ideal accumulation range is ₹480–₹500, closer to the 52-week low (₹480). Current price is slightly above fair value zone, so dips offer better entry opportunities.
📈 Exit / Holding Strategy: If already holding, consider a medium-term horizon of 2–4 years. Exit strategy: partial profit booking near ₹620–₹650 if valuations stretch, while retaining core holdings if profitability sustains. Long-term investors should monitor ROE/ROCE improvement before committing to extended holding.
Positive
- Quarterly PAT surged from ₹180 Cr. to ₹517 Cr. (+67.2%).
- Debt-to-equity ratio of 0.24 indicates manageable leverage.
- DII holdings increased (+1.19%), showing domestic institutional support.
- Dividend yield of 0.66% provides modest income.
Limitation
- High P/E (38.5) compared to industry average (23.2), indicating overvaluation.
- PEG ratio of 2.22 suggests expensive valuation relative to growth.
- ROE (12.1%) and ROCE (15.6%) are moderate, not industry-leading.
- Stock trading below DMA 50 (538) and DMA 200 (569), showing weak technical trend.
Company Negative News
- FII holdings reduced (-1.42%), showing declining foreign investor confidence.
- MACD negative (-14.2), indicating bearish momentum.
Company Positive News
- Quarterly PAT growth of 67.2% shows strong operational improvement.
- DII holdings increased (+1.19%), reflecting domestic institutional confidence.
Industry
- Industry PE at 23.2, lower than Patanjali’s valuation, suggesting peers may offer better value.
- FMCG sector has strong long-term demand potential driven by consumer spending and brand loyalty.
Conclusion
⚠️ Patanjali shows moderate fundamentals with strong short-term profit growth but is currently overvalued. Ideal entry is ₹480–₹500. Long-term investors should wait for ROE/ROCE improvement and valuation correction. Existing holders may exit near ₹620–₹650 on rallies while retaining core positions for medium-term growth.