Patanjali Foods Ltd’s FMCG business revenue rose 2.6% y-o-y to ₹2,890 crore in the March quarter (Q4FY26). However, the bright spot is that discretionary categories such as biscuits and home and personal care grew by about 15% each.
The FMCG segment Ebit rose by 16% y-o-y to ₹276 crore. Biscuit sales growth showed strong momentum with the ‘Doodh’ brand surpassing annual sales of ₹1,300 crore. The softening of wheat prices and stable sugar prices helped in sustaining the profitability of biscuits. Beverage sales were encouraging towards Q4-end, aided by seasonal summer demand.
But these gains were more than offset by a poor show in the edible oils segment as its Ebit fell by 31% y-o-y to ₹178 crore, largely owing to a 20% and 23% spike in palm oil and soya oil prices, respectively. A rise in freight, insurance and packaging material costs also hurt profitability.
Even assuming that Q4 had headwinds, the annual performance isn’t impressive, with a 5% fall in recurring net profit. Despite that, the stock didn’t react much, perhaps because the bulk of the damage through valuation de-rating has already happened.
The Patanjali Foods stock, at its peak price of ₹670.33 on 16 April 2025, commanded a market capitalization of almost ₹73,000 crore. Given FY25’s net profit of ₹1,283 crore, it was valued at a price-to-earnings ratio of 57x, reflecting optimism in assigning a high FMCG valuation multiple to Patanjali.
Excessive valuation
The valuation multiple was excessive for two reasons. First, edible oils contributed about 40% of Patanjali’s total FY26 Ebitda. Valuing the edible oil segment with an Ebitda margin of less than 5%—more like a trading business—at multiples of an FMCG business did not make sense.
Second, Patanjali’s FMCG Ebitda margin is much lower than that of its FMCG peers: 10.81% in FY26 vis-à-vis 15%-plus for Britannia Industries and Hindustan Unilever.
Patanjali’s management has guided for FY27 volume growth of 3-5% in edible oils, 8-10% in foods and 15% in home and personal care. But unless there are material product price hikes or a sharp deceleration in input costs, earnings are likely to be under pressure.
ICICI Securities has cut Patanjali’s FY27 EPS estimate by almost 14%, which means this year’s EPS would be 30% lower than in FY26. While the valuation has now fallen to 35x FY27 EPS estimates of the brokerage firm, the Street awaits signs of earnings growth recovery.