Patanjali Foods’ profit surges despite revenue dip, edible oil boosts bottomline
“Patanjali Foods, led by Baba Ramdev and Acharya Balkrishna, reported a significant profit increase despite a revenue decline. For the quarter ending in June, the company’s net revenues dropped 7.5% to ₹7,173 crore due to falling edible oil prices and heatwave-affected demand. However, net profit tripled to ₹262 crore, boosted by better realizations in the edible oil business and effective price risk mitigation. The company’s EBITDA margin improved from 2.7% to 6.1% year-on-year. The edible oil segment contributed significantly to this performance
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In a quarter when the promoters of Patanjali Foods – yoga guru Baba Ramdev and aide Acharya Balkrishna – had to issue an apex court-ordered public apology, the performance of the company didn’t seem too adversely affected.
For the quarter to June, the net revenues dropped 7.5% to Rs 7,173 crore – affected by a fall in edible oil prices and a heat wave-influenced demand contraction. The net profit tripled to Rs 262 crore due to better realisations in the edible oil business and price risk mitigation amidst volatility. Its ebitda margin improved from 2.7% to 6.1% year-on-year.
The edible oil business constitutes 73% of the total revenues of the company and nearly 53% of the net profit for the quarter. The FMCG business sells ghee, honey, atta, biscuits, breakfast cereals, noodles, soya protein as well as nutraceuticals and contributes 27% to the company’s topline. The FMCG segment posted flat growth in its revenues and 30% dip in the bottomline. The company has reported encouraging performance by the newly launched products and strong double-digit growth in nutraceutical sales across Patanjali stores and e-commerce platforms.
The company’s wind turbine power segment that fulfils 20% of its energy requirements swung to a marginal profit of Rs 44 lakhs in the June quarter from a year ago loss of Rs 2.8 crore. The company has been increasing the area under oil palm plantation with 75,667 hectares having been brought under it at the end of June quarter.
Patanjali Foods is set to acquire the home & personal care business from Patanjali Ayurveda comprising 91 products across four key segments of dental care, skin care, home care and hair care. The business that delivered revenues of Rs 2771 crore and ebitda margin of 18% has been valued at Rs 1100 crore. This acquisition will boost the company’s FMCG portfolio and the share of the FMCG segment in the total business.
Patanjali Foods is valued at a market cap of ~ Rs 57,600 crore and is trading at a PE of 61. The stock is up 1.4% year-to-date even as the Sensex has risen 11.5% during the same period. The company’s margin profile is still that of a commodity trading player. As its FMCG portfolio increases and gains traction, it will improve its overall profitability and consequently valuations.
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