Baba Ramdev-backed Patanjali Foods recorded a decline in profitability for the quarter that ended September 30, 2022 (Q2FY23) period. The company garnered a net profit of ₹112.28 crore in Q2FY23 down by 31.65% from a PAT of ₹164.27 crore in Q2FY22. Also, sequentially, its Q2 PAT dipped by a whopping 53.5% from ₹241.25 crore in Q1FY23. On the profitability front, the company witnessed multiple headwinds in the edible oil segment during the quarter.
In its regulatory filing, Patanjali Foods said, during the quarter, the edible oil industry witnessed pressure on margins largely attributed to the volatility in global prices of various edible oils which fell by almost $400-500 per ton in these 3 months. As India imports more than 60% of its edible oil requirement, retail prices came under pressure taking cues from the global market impacting profitability.
Also, high inflation acted as a spoilsport by impacting operating costs that added further put pressure on margins in Q2FY23.
On the top-line front, Patanjali Foods witnessed strong growth. Revenue from operations climbed by 42.02% to ₹8,514.12 crore in Q2FY23 compared to a revenue of ₹5,995.03 crore in the same quarter last year. Compared to revenue of ₹7,210.96 crore recorded in Q1FY23, the company registered a growth of 18.07% in Q2 of FY23. The revenue share of the food & FMCG business has gone up to 28.18% in Q2FY23.
In September 2022 quarter, Patanjali Foods successfully completed the acquisition of Foods business in line with a strategic intent to expand the food business.
In Q2FY23, Patanjali’s food business recorded sales of ₹2,399.66 crore — contributing 37.18% of the total branded sales of the company. Also, the branded sale including the institutional segment witnessed sales of ₹6,453.45 crore — contributing 77.02% of the total sale of products of the company for the period.
Further, Patanjali’s s strategic initiatives started giving results in Q2FY23 as the business mix of Edible Oil and Food business further moved and improved to 74.66% and 28.18% respectively as against the previous year’s quarter of 94.20% and 11.76%.
According to Patanjali, the demand environment remained challenging with persisting high inflation along with monetary/fiscal measures taken by the government including the continuation of stock limits on oils and oilseeds, governments insistence on reduction in retail edible oil prices & passing of price benefits to the consumers.
For the first six months of FY23, Patanjali achieved a total income of ₹15,894.75 crore as compared to ₹11,306.99 crore in H1FY22 — reflecting a growth of 40.57 % on YoY basis. The EBIDTA in H1FY23 stood at ₹755.95 crore with ₹486.11 crore of Profit before Tax and ₹353.55 crore of Profit after Tax.
Patanjali stated that the overall performance continues to show an uptrend due to the robust execution of our strategy to grow the Food & FMCG business by driving its penetration through the distribution strength of the edible oil business and induction of ‘Food portfolio’ from PAL.
For the next few quarters, Patanjali will continue to focus on accelerating the growth of the highly profitable food vertical which shall ensure overall growth of the EBIDTA margin.
Patanjali believes that the food business with a large portfolio of products and robust brands across categories such as Ghee, Chywanprash, Honey, Juices, etc shall continue to grow at a higher pace keeping in mind the growing distribution network and wider availability across the retail shelf.
Further, Patanjali continues to rely strongly on planning and forecasting tools in driving efficiency, and cost optimisation and continues to invest in distribution and marketing to ensure that it can leverage emerging opportunities.
Going forward, it said, “normal monsoons in most parts of the country and proactive interventions by the government and RBI augur well for sustained recovery.”
Patanjali Foods was formerly known as Ruchi Soya.
On Friday, Patanjali Foods shares closed at ₹1,267.95 apiece down by 1.91% on BSE.