Patanjali Foods

The Tin of Cooking Oil in Every Indian Kitchen

Walk into any home in this country around lunchtime and you will find the same quiet workhorse on the shelf — a pouch or tin of refined edible oil. Nobody photographs it, nobody boasts about it, but nothing gets cooked without it. That humble tin is the heart of Patanjali Foods, the company once known as Ruchi Soya. It presses oilseeds, refines the oil, and sells it under names your kitchen already knows — Nutrela, Mahakosh, Ruchi Gold — with the Patanjali stable of ghee, biscuits and staples now bolted on. A steady, unglamorous, everybody-needs-it business. That is precisely why it is worth a cold, unsentimental look.

A Company With Two Lives

You cannot understand this stock without remembering that it has lived two lives. The first ended in wreckage — sales of ₹28,308 crore in 2015 collapsed to under ₹12,000 crore by 2018, with losses of ₹5,573 crore in a single year, and the company was dragged through insolvency. The second life began when Baba Ramdev's Patanjali picked it up out of bankruptcy. Since then the recovery has been real: sales have climbed back to ₹34,157 crore in FY25 and are running at roughly ₹40,170 crore for the year just ended, with the five-year sales growth compounding near 20 percent and the trailing twelve months up about 18 percent.

Notice, though, the ten-year sales figure limps at 4 percent — that number is carrying the corpse of the old Ruchi Soya on its back. So take the twenty-percent five-year figure as the honest story of the *new* company, not the decade-long one. Profit has followed the sales revival — trailing profit growth of 55 percent looks dazzling, but it is dazzling partly because the base was so beaten down. Judge it by the direction, not the headline.

The Dilution You Must Not Skip Over

Here is where I must be blunt, because it is the single fact most reports gloss over. This is *not* a company that has kept its share count still. Equity capital sat at ₹59 crore through 2022, then went to ₹72 crore, and in the most recent year has ballooned to ₹218 crore. On a ₹2 face value that means the share count has roughly trebled. Promoter holding has slid from 80.82 percent to 68.25 percent over three years.

Now, most of this was not the promoter cashing out for a yacht — it was a regulatory follow-on offer to meet minimum public shareholding rules, and the newly issued paper has been eagerly picked up by institutions. Foreign funds moved from 3 percent to 9.2 percent, and domestic mutual funds from a whisker over 2 percent to 12 percent. That is serious institutional accumulation, and for a short holding it matters — big buyers put a floor under a falling price. But dilution is dilution: your slice of the pie is smaller than it was, and per-share profit has to work harder to reward you.

What You Are Paying, and What Might Move It

The stock trades at ₹414 against a book value of ₹120 — about 3.4 times book — and at a P/E of 22.4. Against its own history that P/E looks like a bargain: the five-year median is 48 and the ten-year median 49, so today's multiple is a discount of roughly 54 percent to where the market once habitually valued it. But I will not let you swallow that whole. Those old sky-high multiples belonged to a thinly-floated, momentum-drunk stock in its second-life honeymoon. A soap-and-oil FMCG business genuinely deserves a more sober number. So read the discount as *comfort*, not as a guaranteed spring waiting to uncoil.

The returns are decent but not spectacular — ROCE of 12 percent, ROE of 16.5 percent, and a dividend yield of 0.85 percent backed by a healthy payout near a quarter of profits. Screener flags a low tax rate and possible capitalising of interest costs; keep one eyebrow raised on earnings quality.

The Short-Term Case, Told Straight

For a one-to-six-month window, the setup is clean enough to state plainly. The share has fallen 25 percent over the past year and sits at ₹414, a hair above its ₹406 low and far below the ₹654 high — a beaten, unloved price. Profits are accelerating, sales are pushing past ₹40,000 crore, and the smart money is buying while the crowd sulks. That is a respectable momentum-with-value trade.

But carry no illusions. This is a thin-margin commodity-cum-FMCG hybrid with a chequered past, real share dilution behind it, and a valuation that only looks cheap against an inflated memory. Enter for the recovery and the institutional tailwind — but keep your stop honest and your position sized like a rented house, not a home you plan to live in.