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Adani Wilmar vs Patanjali Foods: Which stock do analysts recommend?


Shares of Adani Wilmar and Patanjali Foods (formerly called Ruchi Soya) have risen up to 29 per cent in a month as sentiment is upbeat due to the upcoming festive season. The shares of edible oil and packaged food products firms might further rally on bourses in the near future amid expectations of rising demand for their products. Both Adani Wilmar and Patanjali Foods have been among the top picks of investors since they have given multibagger returns after their market debut/relisting.

Shares of Adani Group firm Adani Wilmar have zoomed 280.54 percent since their market debut. The share, which listed at Rs 221 on February 8, 2022 hit an intra day high of Rs 841.90 in trade today. The Adani Wilmar stock is now trading near its all-time high of Rs 878.35, hit on April 28, 2022.

On the other hand, shares of Patanjali Foods have rallied a huge 9,148 per cent since their re-listing on January 27, 2020 at Rs 16.10. The stock touched an intra day high of Rs 1,489 today. The stock of Baba Ramdev-led firm hit its all-time high of Rs 1,495 on September 22 (previous session).

Both shares were trading lower today amid weak sentiment in the broader market after the US Federal Reserve raised lending rate by 75 bps.

ALSO READ: Adani Wilmar shares locked in upper circuit, reclaim Rs 1 lakh crore market cap

Shares of Adani Wimar fell over 1 per cent in the afternoon session. The stock touched an intra day low of Rs 801.95 today against the previous close of Rs 817.90 on BSE. However, Adani Wilmar stock is trading higher than the 5-day, 20-day, 50-day, 100-day and 200-day moving averages. Total 8.46 lakh shares of the firm changed hands amounting to a turnover of Rs 69.72 crore . The market cap of the firm stood at Rs 1.05 lakh crore on BSE today.  

ALSO READ: Adani Group’s market valuation stands at Rs 20 lakh crore in August-end

On the other hand, Patanjali Foods stock fell 3.31 percent intraday to Rs 1,432 on BSE today. The stock has declined after three days of gain. Patanjali Foods stock is trading higher than 5 day, 20 day, 50 day, 100 day and 200 day moving averages. In a year, the stock has gained 39 per cent. However, the share has gained 69.83 per cent in 2022. Total 0.31 lakh shares of the firm changed hands amounting to a turnover of Rs 4.48 crore.. Market cap of the firm fell to Rs 52,378 crore on BSE today.  

With both stocks trading near their record highs, investors are guessing which one should they pick to gain from the upcoming festive season.

ALSO READ: Gautam Adani’s Group pledges shares worth $12.5 billion in Ambuja Cements, ACC

Here’s a look at experts said on the outlook of both stocks.

Pavitraa Shetty, co-founder & trainer, Tips2Trades is of the view that both stocks are heavily overbought at the current levels and investors should book profit.

“Even though Patanjali foods valuation metrics like PE ratio is almost half as that of Adani Wilmar, Adani Wilmar  looks a better long term bet due to strong parent name with better operating margins. Currently both stocks are heavily overbought & investors should book profits at current levels and wait for a dip near 1210 in Patanjali foods and 700-710 in Adani Wilmar to initiate fresh buy positions,” said Shetty.

ALSO READ: Baba Ramdev wants to list 4 more Patanjali firms by 2027; here’s the reason why

Ravi Singhal, CEO at GCL believes that Patanjali Foods is a better buy at current levels.

“Both stocks are steadily increasing their market share, but Patanjali’s product line is far superior to Adani Wilmar . Patanjali also looks great in terms of valuation. Patanjali’s target for a year is Rs 1,700,” said Singhal.

Vinit Bolinjkar, Head of Research at Ventura Securities is in favour of Patanjali Foods stock due to its diversified business when it comes to picking one among the two edible oil and packaged foods firms.

Bolinjkar said, “We believe that Patanjali Foods is a better buy compared to Adani Wilmar due to its diversified product portfolio. Besides the valuation gap between both the stocks offers better upside potential in Ruchi Soya compared to Adani Wilmar. FY25 P/E valuation of Ruchi Soya and Adani Wilmar is 25.7X and 57.4X respectively.”

Rajesh Sinha, senior research analyst at Bonanza Portfolio believes that Patanjali Foods is likely to give stable returns in the future.

“If we look at the valuation of these two companies, Patanjali Foods is short of its peer FMCG companies such as Adani Wilmar. Patanjali Foods is currently trading at 51.3x to its TTM EPS while Adani Wilmar is trading at 114.5x to its TTM EPS. If we look at margin also, Patanjali Foods commands 6% operating margin whereas that of Adani Wilmar is in the range of 3%. The FMCG stock has performed exceptionally well recently and has given a 6.3% return in the past month and risen 96.7% in the past six months. On the back of the demand rise in FMCG products in the coming days due to festivals, both of these stocks could see a further rise. It is very difficult to say which one is better as both these companies aspire to gain market share in their respective product segments. But Adani Wilmar may give decent returns whereas investors may consider Patanjali Foods for stable returns in future. We advise that investors may consider any dip in price of both the stocks to enter for long term investment,” said Sinha.

Meanwhile, ICICI Direct has assigned a target price of Rs 1,750 to Patanjali Foods. The market price of Patanjali Foods was Rs 1446.95 at the time of giving recommendation. Time period is 12-18 months when its price can reach defined target.

In a report dated September 20, 2022, the brokerage said, “Patanjali Foods share price has risen 34 per cent in last one year. We initiate coverage on PFL under Stock Tales format with a BUY rating and a target price of Rs 1750/share. We value Patanjali Foods at 40 times FY24 earnings to arrive at a target price of Rs 1750/share.”

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