Patanjali Foods Limited

Patanjali Foods reported a consolidated revenue of approximately ₹8,900 crores for Q1 FY26, marking a significant year-on-year growth of 24%. Despite this top-line expansion, the total EBITDA margin stood at 3.75%, with a PAT margin of 2.02%. This indicates some pressure on profitability, which management attributed to various factors including input costs and duty changes. The company aims for 50-50 revenue split between edible oils and FMCG in 5 years.

The Edible Oil segment was a key growth driver, contributing ₹6,685 crores to revenue, an almost 25% year-on-year increase. Branded edible oil sales accounted for 72% of the total, with strong sequential growth in mustard and sunflower oils. However, the segment's EBITDA margin was 1.78%, impacted by elevated raw material costs and a reduction in import duties from 20% to 10% on crude palm, sunflower, and soybean oils. Management expects margins to recover to 3-4% for the year.

The HPC segment delivered healthy quarterly revenue of ₹639.02 crores, with an impressive EBITDA margin of 18.7%, up from 15.7% in Q4 FY25. Dental care, skin care, and home care were key contributors. The company reiterated its target of 15% YoY revenue growth and anticipates a 200 basis point margin expansion for HPC. In contrast, the Food and other FMCG segments experienced a 15% YoY degrowth in revenue to ₹1,660.67 crores, with EBITDA margin declining to 5.23% from 9.42% in Q1 FY25, primarily due to subdued demand and high-cost inventory.

The FMCG sector witnessed evolving demand patterns in Q1 FY26. Rural markets continued their momentum, showing preference for established brands, while urban demand was initially under pressure due to inflation. However, by the end of the quarter, early signs of revival were observed in urban consumption, driven by easing inflation and policy measures. Management noted that the softening commodity markets and price benefits are expected to lead to an uptick in consumer demand, especially in the food sector.

Patanjali Foods is actively expanding its distribution footprint. While modern trade faced challenges with footfall drops and competition from e-commerce, the company is focusing on strengthening its presence across emerging platforms. Quick commerce now accounts for 70% of its total e-commerce business. The D2C channel, though currently below 1% of total revenue, is a strategic focus, particularly for nutraceuticals, where the company plans to introduce new brands and leverage its own Order Me app and website.

Government policies significantly influenced the quarter's performance. The reduction in basic customs duty on crude edible oils from 20% to 10% (effective May 30, 2025) impacted edible oil profitability but is expected to lower input costs and drive consumer off-take. In the staples segment, government interventions in procurement and stock declaration created volatility and risk for private trade. Management stated a cautious approach to staples, prioritizing overall company margin over top-line growth in low-margin categories.

The company aims for an overall FMCG segment growth of 8-10% this year, with HPC expanding by 15% and edible oils by 2-3%. Long-term aspirations include ₹50,000 crores in revenue with a double-digit EBITDA margin. Patanjali Foods is focused on premiumization, new product launches (e.g., Cholesterol Care Liquid, Orthocare Liquid), and expanding its oil palm plantation business, which doubled its quarterly revenue to ₹592 crores. The company is confident in its brand equity and ability to navigate market challenges^🌐.