PATANJALI - Patanjali Foods Limited Share Price

In the Q4 FY25 earnings conference call, Patanjali Foods Limited management provided a positive outlook for the company, highlighting robust financial performance and strategic initiatives. The key points from the management include:

1. Strong Financial Results: The company reported the highest-ever quarterly revenue from operations at Rs. 9,692.21 crores, reflecting a 17.8% year-on-year growth. Gross profit stood at Rs. 1,656.39 crores, with a margin of 17.09%. For FY25, total revenue reached Rs. 34,289.40 crores, with EBITDA at Rs. 2,079.06 crores (36.89% growth YoY) and PAT at Rs. 1,301.34 crores (70.08% growth YoY).

2. HPC Business Integration: The Health and Personal Care (HPC) business contributed 7.47% to the top line and 20.03% to EBITDA. The management aims for Foods and FMCG verticals to account for approximately half of total turnover in the coming years.

3. Distribution Expansion: The company amplified its distribution network by adding 30,000 new retail outlets in Q4 FY25, increasing total reach to nearly 2 million outlets, with a focus on rural markets.

4. Advertising Investment: Patanjali increased its advertising spend significantly in FY25 to Rs. 233 crores, up from Rs. 71 crores in FY24, with major campaigns around Nutrela products.

5. Forward-looking Strategy: Management anticipates a demand revival in Food, FMCG, and HPC categories driven by government initiatives, falling inflation rates, and consumer sentiment improvements. They expect stable palm oil prices to boost margins.

6. Long-term Goals: The company aims for a steady 15% year-on-year growth in the HPC business, targeting to double its current revenue within four and a half years.

7. Outlook: Management remains optimistic about maintaining margins in the Edible Oil segment between 2% and 4%, projecting food margins to stabilize between 8% and 10% in the near term. They expect Edible Oil volume growth of 2% to 3% in FY26.

The strategic advancements and financial growth pave the way for a promising future for Patanjali Foods Limited.

Q1: Vishal Gutka: "What are your ambitions for the HPC business, and can we expect a Rs. 1,000 crores quarterly run rate in 2-3 years?"
I am confident that our HPC business, currently at about Rs. 730 crores, will achieve a minimum growth rate of 15% year-on-year. We are focusing on launching attractive premium skincare products and expanding our home care portfolio. In about four and a half years, we expect to double our current revenue by leveraging market growth and consumer traction with our premium products.

Q2: Saloni Patil: "What are the ESOP cost and CAPEX estimates?"
We expect regular CAPEX to be around Rs. 125-150 crores annually, mainly for maintenance. Over the next two years, we plan to invest approximately Rs. 1,000 crores in CAPEX for growth initiatives. As for ESOP costs, we have debited about Rs. 122 crores this year, averaging Rs. 10 crores per month for fair valuation adjustments.

Q3: Akshay Raut: "How sustainable are margins in our Edible Oil segments?"
We are targeting Edible Oil margins between 2% and 4%. Currently, we recorded a margin of 4.64%, sustained for five consecutive quarters. Through effective supply chain management and distribution expansion, we aim to maintain or improve margins, despite past volatility in the Edible Oil markets.

Q4: Yogi Modi: "What's the demand outlook in rural and urban markets?"
Demand has been muted, led by cautious consumer spending. However, I see potential growth with new tax reliefs aiding urban consumption and a decrease in food inflation. We anticipate improved demand across both segments in the upcoming quarters, underpinned by government support and a stable price basket.

Q5: Kunal Shah: "What can we expect from palm oil volume numbers?"
This year, palm oil volumes declined 5% primarily due to elevated prices. Last year's volume was around 2.6 lakh tons, while this quarter, it dropped to 2.25 lakh tons. However, our strategy supports future growth, as current palm oil prices are stabilizing.

Q6: Disha Giria: "What is the reason behind restatements in revenue figures?"
We've adjusted our accounting to reflect seedling income from palm plantations and export subsidy differently. This year, Rs. 47.50 crores were reclassified from other income to operating income, improving transparency in our financials.

Q7: Ajay Thakur: "What is the contribution of palm oil to EBITDA margins?"
While palm oil accounts for 70% of our volume, it does not equate to a similar EBITDA margin contribution due to its lower consumer pricing power. About 50% of our income comes from palm oil, but profitability comes significantly from branded oils like soy and sunflower, where we can command higher prices.

Q8: Abhijeet Kundu: "How will input price moderation affect margins?"
We foresee an interplay between input price moderation and improved food margins. If commodity prices stabilize, we expect food margins could recover toward historical norms of 8-10%. Additionally, we are projecting consistent growth targets across categories, enabling us to manage margins effectively.