Sub-optimal results for the quarter; However company on the right track
Two things should be looked in Patanjali’s result for a long term investor →
- Sales growth in Foods business (% mix of food)
- Area of tree plantation
Rest of the numbers are significantly variable -
- Patanjali’ edible oil business is a commodity business with severe price fluctuations; The revenue growth is unpredictable.
- Foods business is significantly impacted by inflation, as Patanjali is selling “me too” FMCG products primarily, where it is difficult to pass on cost to customer.
If you look at result from the lens mentioned above, it was a good result -
- Foods contribute to 30% revenue now Vs 20% in FY23 and 10% in FY21
- Palm oil plantation will reach >70k hectares by end of this year, it was 60 k in FY22 → This is a long term bet. After> 10-15 years, I believe this will help detach company’s profits from global fluctuations in prices
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