Patanjali Foods Q2 Results Review - Topline Moderates; Margins To Gain From Accretive Businesses: Systematix

Systematix Research Report

Patanjali Foods Ltd. reported Q2 FY25 revenue below our expectations but delivered a beat on operating earnings, with revenue/ Ebitda/profit after tax up 4%/ 14%/ 21% YoY. Revenue growth of 4% YoY was driven by edible oil sales growth of 10% YoY, while the foods business sales declined 7% YoY.

Within foods, sales of staples (rice, pulses, wheat) and ethnic foods (cow ghee, chyawanprash, honey) grew. Management indicated that sales were impacted by uneven rainfall, low out-of-home consumption and weak consumer offtake.

While rural demand momentum is robust (Patanjali Foods sales mix of 40% rural), urban demand is stressed and slowing down. The company is seeing a distinct strain on demand in the top 20 cities, centered around general trade channel where it sees some inventory buildup.

In the backdrop of sharp input-cost inflation (crude/ refined oil prices up ~30% over two months, wheat higher as well), Patanjali Foods has taken edible oil price hike of 10-12%.

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