Patanjali Foods Q3 Results: Revenue Falls On Weak Rural Demand, Misses Estimates

Patanjali Foods' Q3 net profit rose 2.4 times to Rs 269.18 crore, compared to an estimate of Rs 218 crore.

<div class="paragraphs"><p>Patanjali poster in New Delhi. (Photo: BQ Prime)&nbsp;</p></div>
Patanjali poster in New Delhi. (Photo: BQ Prime) 

Patanjali Foods Ltd.'s third-quarter revenue fell, missing estimates, as prices of edible oil stabilised and rural demand remained muted.

Revenue of the consumer goods maker declined 7% sequentially to Rs 7,926.64 crore in the three months ended December, according to its exchange filing. That compares with the Rs 8,360.8 crore consensus estimate of analysts tracked by Bloomberg.

Patanjali Foods Q3 FY23 (Standalone figures, QoQ)

  • Net profit rose 2.4 times at Rs 269.18 crore, compared to an estimate of Rs 218 crore. On a year-on-year basis, net profit rose 15%.

  • Operating profit jumped 89% to Rs 368.03 crore, against a forecast of Rs 319.6 crore.

  • Margins came in at 4.6% as against 2.3% a quarter ago.

"The prices of edible oils, the biggest portion of the company’s revenue, stabilized and recovered from the sharp decline witnessed in Q2," the company said in a statement. The edible oils segment registered sales of Rs 6,066.51 crore, contributing 76.53% of the company's total revenue.

Urban demand for fast-moving consumer goods products, it said, has been steady while rural demand continues to contract. "Festive and marriage season revived the demand for food products during this quarter."

The branded sales segment, including institutional segment, recorded sales worth Rs 6,447.81 crore comprising 81.91% to total sales.

Sales of the food business, including the business acquired from its parent Patanjali Ayurved Ltd., stood at Rs 1,570.08 crore during the quarter contributing 19.8% to branded sales. Last year in July, Patanjali Food completed the acquisition of foods business from Patanjali Ayurved.

According to the company, there has been some stability and revival observed in the quarter after sharp volatilities and downtrend witnessed in the previous quarters.

"The macro challenges faced earlier in terms of geopolitical standoff, soaring inflation, supply constraints, high interest rates and demand concerns have waned a bit. International food, energy and other commodity prices have eased moderately in recent times."

According to the company, India has revived fast supported by good progress of rabi sowing, sustained urban demand, improving rural demand, a pick-up in manufacturing, rebound in services and robust credit expansion.

Its food segment, with an extensive product portfolio comprising brands across categories—such as ghee, chyawanprash, honey, juices, soya chunks—is expected to continue growing at a higher pace on the back of a robust distribution network and wider availability across retail shelves.

It remains "cautiously optimistic" of growth in the medium term, given the recent softening of input prices and inflationary trends, the company said. "Our focus continues to be on delivering broad-based profitable growth."

Patanjali Foods' Chief Executive Officer Sanjeev Asthana recently told BQ Prime that he expects rural demand to pick up on the back of a good harvest season, which typically puts more money in the hands of households. He also expects higher demand and softening commodity prices to aid the company's margins in the quarters to come.

Shares of Patanjali Foods ended 3.85% lower on Wednesday before the results were announced, compared to a 1.25% fall in the benchmark Nifty 50.