Patanjali Foods witnessed a significant decline of almost 5%, with its shares falling to INR 1,232 during Monday’s trading session on the BSE. This drop came in response to the company’s financial report, which revealed a substantial 64% year-on-year (YoY) decrease in net profit for the quarter ending June 2023, amounting to INR 878 crore. Despite this profit setback, the company experienced a noteworthy growth in revenue from operations, recording a nearly 8% YoY increase to reach INR 7,767 crore.
The significant decline in net profit was a result of subdued sales growth and a pronounced deterioration in operational performance.
Meanwhile, its total expenses for the quarter rose to INR 7,691 crore from INR 7,038 crore a year ago.
The operating profit, computed as EBITDA (earnings before interest, taxes, depreciation, and amortization), experienced a sharp 57% year-on-year decline, reaching INR 169 crore. Additionally, the operating margin contracted by 326 basis points to 2.17%.
The core edible oils segment registered a 13% decrease in quarterly revenue, amounting to INR 5,891 crore. On the other hand, the food and FMCG division recorded a notable 8.2% increase in revenue, reaching INR 1,952 crore.
The significant decline in EBITDA can be attributed mainly to an operational deficit in the edible oils segment. Specifically, the edible oils business incurred an operating loss of INR 147 crore during the quarter.
The Food & FMCG category demonstrated growth both in terms of value and volume, making a significant contribution of approximately 25% to the overall sales. During the quarter, branded sales constituted around 71% of the company’s total revenue.
The company noted the presence of subdued market conditions within the edible oil sector, attributed to the persistent decline in prices. Despite the decline in revenue, the company managed to uphold its market share. Notably, there was a remarkable 36% year-on-year increase in volumes during this period.
Exports turnover experienced a substantial 128% year-on-year surge, reaching INR 162.45 crore. Branded sales, encompassing both the foods and FMCG segment as well as edible oils, amounted to INR 5,527.78 crore.
Despite facing the challenges of increasing inflation and macroeconomic factors, the Foods and FMCG segment disclosed an EBITDA of INR 360.80 crore, maintaining an EBITDA margin of 18.48%. The company attributed this performance to effective cost efficiency measures.
By 11:19 am, the stock was trading 2% down at INR 1,267.4 on the BSE. Notably, the stock has witnessed a substantial surge of nearly 40% over the past six months, and its value has risen by 7% year-to-date.
According to data from Trendlyne, the stock’s average target price stands at INR 1,405, reflecting a potential upside of 11% based on the current market prices. Notably, one analyst has given the stock a consensus recommendation of ‘Strong Buy’.
From a technical perspective, the stock’s 14-day Relative Strength Index (RSI) is currently at 51.3. According to Trendlyne data, an RSI reading below 30 is indicative of an oversold condition, while a reading above 70 suggests the stock might be overbought. Additionally, the Moving Average Convergence Divergence (MACD) stands at 43.2, positioning itself above its Center Line but still below the signal line.