Patanjali Foods gains 10% from day's low after over 20% fall in 8 sessions

In past one month, the stock was down 20 per cent after the government decided to discontinue import of crude soybean oil under tariff rate quota (TRQ).

Shares of Patanjali Foods moved higher by nearly 5 per cent to Rs 948.90, recovering 10 per cent from its low of Rs 865 on the BSE in Monday’s intra-day trade. In past eight trading days, the stock of Baba Ramdev-backed FMCG company had slipped 21 per cent from a level of Rs 1,206.45 on January 24, 2023.

At 11:54 AM; Patanjali Foods traded 4 per cent higher at Rs 943.50, as compared to 0.66 per cent decline in the S&P BSE Sensex. The average trading volumes on the counter jumped 1.4 times today. A combined 363,000 equity shares had changed hands on the NSE and BSE. Currently, Patanjali Foods traded under the T group on the BSE. In the T2T segment, each trade has to result in delivery and no intra-day netting of positions is allowed.

Patanjali Foods has underperformed the market in recent past. In past one week, the stock was down 11 per cent, as compared to 1.6 per cent rise in the S&P BSE Sensex. In one month, it declined 20 per cent, as against nearly 1 per cent gain in the benchmark index. Further, in past three months, it slipped 31 per cent, as compared to 1 per cent decline in the Sensex. The stock had hit a 52-week high of Rs 1,495 on September 22, 2022.

The recent underperformance is partly attributed to government's decision to discontinue import of crude soybean oil under tariff rate quota (TRQ) from April 1 this year.

"Last date for import of crude soybean oil under TRQ has been revised to March 31, 2023. Further, no allocation of TRQs for import of crude soybean oil shall be made for 2023-24," the directorate general of foreign trade (DGFT) said in a public notice in mid-January. READ MORE

Patnajali Foods (formerly known as Ruchi Soya Industries Limited), a diversified Fast Moving Consumer Goods (FMCG) & Fast Moving Health Goods (FMHG) focused company with 25 strategically located manufacturing facilities, well recognized brands with pan India presence and allocation of 6.23 lakh hectares of oil palm plantation.

In October-December quarter (Q3FY23), Patanjali Foods reported 139.73 per cent sequential growth in profit after tax (PAT) at Rs 269.18 crore, on back of healthy operational performance. Earnings before interest, depreciation, tax and amortization (EBIDTA) grew by 97.5 per cent quarter-on-quarter (QoQ) to Rs 406 crore. EBITDA margin improved 270 bps to 5.11 per cent from 2.41 per cent in Q2FY23. Revenues from operations, however, declined 6.9 per cent QoQ at Rs 7,926 crore. On year-on-year basis, revenue and PAT grew 26.2 per cent and 15 per cent, respectively.

After sharp volatilities and downtrend witnessed in the previous quarters, there has been some stability and revival observed in Q3FY23. The macro challenges faced earlier in terms of geo-political standoff, soaring inflation, supply constraints, high interest rates and demand concerns have waned a bit, the company said.

The prices of edible oils, the biggest portion of the company’s revenue, stabilized and recovered from the sharp decline witnessed in Q2. Urban demand for FMCG products has been steady while rural demand continues to contract. Festive and marriage season revived the demand for the food products during this quarter, Patanjali Foods said.

On outlook, the company maintains its aspirations of delivering sustainable and profitable growth with significant contribution from the foods vertical. While the near term shows positive growth aspects, the management remains cautiously optimistic on the medium term given the recent softening of input prices and inflationary trends.