Baba Ramdev-backed stock to turn ex-dividend tomorrow. Do you own?

Market


On BSE, Patanjali Foods shares settled at 1,481 apiece up by 10.35 or 0.70%. The shares hit a new 52-week high of 1495 apiece earlier today.

The company’s market valuation is around 53,611.44 crore.

Patanjali Foods shares have witnessed an upside stick throughout the week. The shares are multi-baggers with returns in triple-digit to investors in 2 years.

So far this week, Patanjali Foods shares have jumped by nearly 11%. The shares have risen by nearly 35% in a month, while its half-yearly jump is more than 49%. So far in 2022, the shares have climbed over 62%. In a year, however, the shares jumped over 42% compared to 1,040.8 price level on September 22, 2021. Noteworthily, the shares emerged as a multi-bagger by skyrocketing nearly 215% in 2 years. The shares were around merely 470 on September 22, 2020.

Patanjali Foods has fixed September 26 as the record date to determine eligible shareholders for the dividend. The edible oil manufacturer has announced a dividend of 5 per equity share on 36,19,94,853 equity shares having a face value of 2 each for fiscal FY22.

Thereby, the stock will turn ex-dividend on September 23.

Patanjali will pay the 5 per equity share dividend benefit to eligible shareholders after the development receives approval in the 36th Annual General Meeting (AGM) which is scheduled on September 29.

Dividends are corporate actions decided by a listed company. They are distributed in the form of incentives out of a company’s profit. Different dates need to be noted when it comes to dividends — these are — ‘announcement date’, ‘record date’, ‘ex-dividend date’, and ‘payment date’.

The announcement date is the day the dividend is announced, while the ‘record date’ is the day when the company finalises the eligible shareholders whose names appear in the records of the company. Before ‘record date’ comes ‘ex-dividend date’ helps in determining which shareholders will receive the dividend benefit. Generally, an investor will have to purchase a stock one or two days before the ex-dividend date.

On stock exchanges, there are two types of settlement options for buying and selling equity shares. These are ‘T+1’ and ‘T+2’. Under the first option (T+1), the settlement in stock takes place in 1 day and the transaction reflects in the Demat account accordingly. While under the second option (T+2), any stock bought or sold is reflected in the Demat account after two trading days of the transaction initiated. The letter ‘T’ stands for ‘trading day’ or ‘transaction date’.

On BSE, Patanjali is listed under the ‘T’ Group with a settlement type of ‘T+2’. So any shares bought after the ex-dividend date will not be eligible for dividend benefit.

Earlier this week, Baba Ramdev announced to list four new Patanjali companies on Indian bourses over five years. These four companies are — Patanjali Ayurved, Patanjali Medicine, Patanjali Wellness and Patanjali Lifestyle. The Yoga Guru said, Patanjali group turnover today is 40,000 crore and the group is targeting to raise to 1 lakh crore in next 5 years.

Baba Ramdev’s Patanjali Ayurved is the parent company of Patanjali Foods which was earlier listed as Ruchi Soya on stock exchanges. Patanjali Foods is one of the largest palm oil plantation companies in India. It has palm plantations in 55 districts across 11 states, namely Andhra Pradesh, Telangana, Karnataka, Gujarat, Odisha, Tamil Nadu, Chhattisgarh, Arunachal Pradesh, Assam, Mizoram, and Tripura.

Should you buy Patanjali shares?

Sanjay Manyal, Research Analyst at ICICI Direct in his research note on Patanjali Foods said, “We initiate coverage on PFL under Stock Tales format with a BUY rating and a target price of 1750/share.”

According to Manyal, key triggers for future performance in Patanjali Foods are:

– PFL has 3.9 million tonnes (MT) of oilseed crushing & refining capacity with current utilisation of 40%. The company would be able to increase capacity utilisation by leveraging its existing & Patanjali brand to drive volumes.

– Acquired foods business of PAL commands 16% operating margins with high sales contribution of ghee, juices, atta and honey. With consolidation of foods business, overall margins of the company to see an uptick.

– Backward integration in palm plantation is likely to reduce its dependency on imported CPO. Moreover, expansion in palm extraction capacities by the company would help in improving margin in the edible oil business in the next three to five years.

– The combined distribution network of PAL & PFL has expanded the company’s reach to 1 million retail touch points. Further, its products can be promoted & advocated through more than 3000 Patanjali health centres.

 

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.

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