Patanjali Foods shares up over 2% after profit surge in first quarter
Shares of Patanjali Foods rose over 2% on July 22 after reporting a threefold jump in net profit to ₹263 crore for Q1FY25. This growth was driven by the stable performance of its FMCG business and reduced volatility in edible oil prices. However, overall revenue declined by around 8% to ₹7,173 crore. Despite a decline in EBIT due to high IPL advertising spend, CEO Sanjeev Asthana expects margins to stabilize at 11-12% for the FMCG segment.
Shares of Patanjali Foods were up over 2% on July 22 after the company reported a threefold jump in net profit to ₹263 crore for the April-June 2024 quarter (Q1FY25)/
The profit growth was driven by stable performance of its fast moving consumer goods (FMCG) business and reduced volatility in edible oil prices,
The overall revenue declined around 8% to ₹7,173 crore, while the food and FMCG segment, which contributes around 30% to total business, was flat.
The earnings before interest and tax (EBIT) of the food and FMCG business halved due to the high advertising spend during the IPL.
Sanjeev Asthana, CEO of Patanjali Foods, explained that the margin in this quarter have slightly tapered off, primarily due to two exceptional events.
First, the unusually high temperatures impacted the production and sales of Indian specialty food items such as Chyawanprash, ghee, and honey.
Second, an inventory build-up from the previous quarter, driven by an extraordinary business surge, affected the margins.
The inventory overhang from the previous quarter and the heatwave are expected to normalise, and the company projects a stable margin range of 11 to 12% on a blended basis for the FMCG segment.
Although the company’s volumes experienced a slight year-on-year decline, it remains optimistic about achieving a 6-8% volume growth in FY25.
Asthana said the company’s nutraceutical segment continues to perform strongly with a margin of 25%, while the Indian specialty foods business maintains a margin of 16-18%.
The consumer staples segment, however, has a lower margin range of 4-5%.
The company, which has a market capitalisation of ₹59,063 crore, has seen its shares rise 25% over the last year.
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