Patanjali Foods CEO Expects Margin Pressure In Coming Quarters Amid Rising Input Costs

Patanjali Foods’ Chief Executive Officer Sanjeev Asthana expects the company’s margin to remain under pressure in the coming quarters due to rising cost of raw materials like palm oil and wheat.

Asthana told NDTV Profit that Patanjali Foods' FMCG segment took a hit in the July-September quarter due to hikes in raw material prices.

Pointing out that the income from biscuits was lower, he said, "From an 18% Ebitda, we came down to 9% because wheat flour prices were up substantially. Edible oil and palm oil prices were also up. So that took a hit. We believe that if this trend continues, it is going to put a certain bit of margin pressure going forward.”

For the quarter ended September in the current financial year, the FMCG company has reported a 13.7% increase in revenue at Rs 8,154.19 crore versus Rs 7,173.06 crore in the preceding months. Net profit grew 17% quarter-on-quarter to Rs 308.58 crore from Rs 262.72 in Q1. Margin, however, shrunk 0.2% to 5.5% during this period.

Despite the rising input cost, Asthana is confident of achieving the guidance for FY25. “Our guidance of 10% overall FMCG margin for the year and 4% for edible oils should be achieved and we should be able to do a 6% plus on a blended basis in terms of Ebitda for the full fiscal,” he said.

Urban stress has also contributed to volume degrowth in certain categories of the food business, Asthana noted. “The biscuit growth has come down from 22% in the last two years to 5%. So, we are witnessing some bit of a slowdown,” he said.

While stressing that the company was taking steps to improve the situation, the top executive said, “By increasing our distribution channel through e-commerce and modern trade, we are giving a big push to it and are working on it.

Asthana predicted that the company’s performance in second half will be better than H1 supported by the ongoing festive season.

“Some of our products see demand building up in the festive season and it continues through the winter. So, the period between October and March is positive. And I am reasonably confident that we should see a growth of 8–10% on the FMCG side,” he said.

Shares of Patanjali Foods Ltd. on Friday closed 7.9% lower at Rs 1,639 apiece compared to the benchmark Nifty 50's decline of 0.9%.