Patanjali Foods Limited

Patanjali Foods reported its highest-ever quarterly revenue from operations in Q4 FY25, reaching ₹9,692.21 crores, a 17.8% year-on-year growth. Gross profits stood at ₹1,656.39 crores with a 17.09% margin, and EBITDA was ₹568.88 crores with a 5.87% margin. For the full financial year 2025, total income was ₹34,289.40 crores, EBITDA grew 36.89% to ₹2,079.06 crores, and PAT increased by 70.08% to ₹1,301.34 crores, exceeding all previous years' performance.

The FMCG sector experienced a moderate operating environment in Q4 FY25, with 11% year-on-year value growth (5.1% volume, 5.6% price). Volume growth was led by HPC categories (5.7%), driven by strong rural demand. However, Food volumes reduced from 6% to 4.9% due to decreased staples demand. Urban markets saw muted growth due to persistent food inflation, high interest rates, and stagnating real wages, suppressing discretionary spending.

Q4 FY25 marked the first full quarter of HPC business integration, contributing 7.47% to total top-line and 20.03% to total EBITDA. The company aims for a minimum 15% year-on-year growth in HPC, with a target to double the business in 4.5 years. Management expects a 200 basis point margin expansion in Q1 or Q2 FY26, reaching 16-17%, driven by efficiencies, distribution expansion, and premium product launches in categories like dental, skin, and home care.

The Food & FMCG segment's revenue declined to ₹2,257.22 crores in Q4 FY25 from ₹2,704.65 crores in Q4 FY24, primarily due to slowdown in urban demand for premium products like cow ghee and seasonal impact on chyawanprash. The company plans to revive growth by leveraging distribution expansion (from 1.5 million to 2 million retail outlets), anticipating urban demand recovery from income tax relief, and targeting 8-10% growth for ethnic food categories. Biscuits revenue was ₹426.25 crores in Q4 FY25 and ₹1,677.38 crores in FY25.

The Edible Oil business posted revenues of ₹6,764.08 crores in Q4 FY25 with an EBITDA margin of 4.66%. Overall FY25 volumes declined by 5%, mainly due to palm oil prices trading at a premium to soy and sunflower oils. Management maintains a prudent risk management approach, reducing hedge ratio to under 2% during Q4. They aim to sustain Edible Oil margins in the 2-4% range, focusing on branded segments like soy and sunflower for higher profitability, while palm oil remains a volume driver.

As of March 2025, Patanjali Foods cultivated 89,546 hectares of oil palm. The company aims to expand its plantation area to 0.5 million hectares over the next five years, covering 60% of India's requirement. For FY26, the target is to plant 40,000 hectares, followed by 125,000 hectares in FY27. The palm plantation segment generated ₹1,263 crores revenue and ₹203 crores EBITDA (16% margin) in FY25, up from ₹951 crores and ₹156 crores in FY24, respectively.

Patanjali Foods significantly strengthened its distribution capabilities, adding 30,000 new retail outlets in Q4, expanding total reach to nearly 20 lakh outlets. The company aims to progressively increase its direct distribution reach to 4 million. Ad and promotion expenses in Q4 FY25 were 3.36% of revenue, with FY25 ad spend ramping up to ₹233 crores from ₹71 crores in FY24, including onboarding various brand ambassadors like MS Dhoni and Shahid Kapoor.

The Food business overall margin for FY25 dropped to 8.35% from 13.18% in the previous year. This compression was largely attributed to high commodity prices, including palm oil (30-40% elevated), sugar (2-5% up), wheat (12% up), and paddy (5-8% up). These core raw materials significantly impacted the manufacturing costs of FMCG Food products, leading to margin pressure. Management expects this to be a temporary phase and anticipates a recovery as commodity prices stabilize.