Analyst Concall
Pantanjali Foods sees 15% personal care ops growth as guided
This story was originally published at 14:18 IST on 16 May 2025
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--Patanjali Foods: Q4 volume growth led by home, personal care segment
--CONTEXT: Patanjali Foods mgmt's comments in post-earnings investor concall
--Patanjali Foods: Target 15% YoY growth in home, personal care segment
--Patanjali Foods: Distinct urban demand slowdown impacted Q4 earnings
--Patanjali Foods: See recovery in demand in Oct-Mar
--Patanjali Foods: Some stress in consumer staples may continue in FY26
--Patanjali Foods: Tax relief, low food inflation to spur urban demand ahead
--Patanjali Foods: Palm plantations acreage to rise faster FY26
--Patanjali Foods: Palm oil is mainstay of co's edible oil business
--Patanjali Foods: Palm oil margin tends to drag in front-end consumer sales
--Patanjali Foods: See revenue improve sequentially in home, personal pdts
--Patanjali Foods: Mindful of commodity price impact on food, FMCG margins
By Rajesh Gajra
NEW DELHI – The integration of the home and personal care business acquired from Patanjali Ayurved Ltd. last year has been time consuming, the management of Patanjali Foods Ltd. said in a post-earnings conference call with analysts and investors Friday. Patanjali Foods expects the non-food operations to stabilise from the current quarter onwards and its revenue to grow sequentially, in line with the 15% on-year revenue growth projection made at the time of acquisition, the management said.
The March quarter was the first full quarter whose financials included the non-food segment, following its integration with Patanjali Foods in the middle of the December quarter. During the quarter, the volume growth was good in this segment and aided the overall volume growth for the company. Revenue from the segment contributed 7.5% to the overall revenue. Going forward, the company intends to drive growth and market position through innovation in the product porfolio since the consumers tend to be more particular about choices and brand preferences, the management said.
"Our oral care category remains the largest contributor within the HPC (home and personal care) segment and has delivered good volume numbers, mainly driven by enhanced distribution across both urban and rural markets," the management said in the concall. The company is targeting a minimum 10% growth in its oral care products, the management said. The oral care business opportunities are much larger and the company will continue to bring innovation with new product launches, it said.
On the other hand, the food and fast-moving consumer goods segment has been hit hard by tepid consumer demand, particularly in urban markets, "weighed down by persistent food inflation, interest rates, and stagnating real wage growth." This impacted the March quarter performance of the segment with the revenue falling 17% on year to INR 22.6 billion.
Rising commodity prices and food inflation, and changing consumer preferences in some products, had a bearing on the margin of the segment and the earnings before interest, tax, interest, depreciation, and amortisation for the March quarter also fell 7% on year to INR 1.4 billion with the EBITDA margin contracting sharply to 6.3% from 9.6% a year ago.
The management said it is very mindful of the impact commodity prices have on the margins of its food and FMCG business. It sees some stress in consumer staples demand to continue in 2025-26 (Apr-Mar) but expects the overall demand to revive from the second half (Oct-Mar) of the current financial year. Tax reliefs from the latest Union Budget, an expected good monsoon, and a decline in food inflation will likely spur demand, including urban demand, going forward, the management said.
The edible oils segment, the largest for Patanjali Foods in terms of revenue, benefitted from steady demand and price hikes in the latest quarter. The revenue from the segment jumped 21% on year to INR 67.6 billion in the March quarter. The EBITDA jumped 2.35 times to INR 3.2 billion in the reporting quarter, with the EBITDA margin expanding substantially to 4.7% from 2.4% a year ago.
According to the management, palm oil is the mainstay of the edible oil segment in terms of volume, although the margins tend to be a bit lower than the other oils such as sunflower, soyabean, and mustard. Around 70% of the palm oil is in branded form and sold to consumers and around 30% is sold to institutional buyers. The margins tend to drag in the front-end consumer sales which are largely in southern states of the country, the management said.
The company also operates oil palm plantations business, under which the plantation area increased by 15,000 hectares to 89,546 hectares in in FY25. The management said the momentum is going to pick up in FY26 with a targeted addition of 40,000 hectares. "Next year (FY27) the pick-up will be 125,000 hectares, and thereafter, it will continue on that same momentum trajectory," the management said. The company has put a 5-year target of 500,000 hectares acreage for its oil palm plantations.
At 1403 IST, shares of Patanjali Foods were 2.3% lower at INR 1,770 on the National Stock Exchange of India. End
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Tanima Banerjee
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