is patanjali foods the dark horse we’ve stopped watching?

While in conversation with a friend about FMCG brands, we stumbled upon Patanjali Foods FY22 financials.

I dived a little deeper into the rabbit hole and was surprised to learn this:

• Revenue reported for FY22 is 24,284 crores INR

This is almost half of HUL, which reported 51,193 crores INR for FY 2022

What’s worth observing is not just the sheer scale at which Patanjali Foods is operating; its growth percentage has also been very significant over the past decade.

From FY21-FY22, a 33% growth can be observed in the company’s topline – which is massive considering the current business volume.

• While the scale seems promising, the net profit trend has been more or less in the grey area. For FY22, it’s 806 crores INR; if we benchmark this against HUL, the latter reported 10x+ Net Profits – 8818 crores INR

Experts have pointed this out as a function of the supply chain challenges Patanjali has faced and the horizontal expansion strategy. (More on this in the next point)

Although interestingly, the net profits reported for FY 20 were worth taking note of; it was 7,672 crores INR at a topline of 13,117 crores. (I would love to chat if you’ve read or know more about this)

• Patanjali Foods currently has a portfolio of 550+ SKUs. This is something that the brand has been criticized for as well by the experts, as building an efficient supply chain for such a broad portfolio is challenging, which somewhere reflected in the net profits reported as well.

Many experts recommend going deep into one category with limited SKUs instead of horizontal scaling.

• Patanjali Foods did not directly list on the public markets. The brand acquired Ruchi Soya (a public entity) at 4350 crores INR through insolvency.

You’d know Ruchi Soya via its edible oil brand (Mahakosh), Soya Chunks brand (Nutrela) etc.

It would be interesting to watch Patanjali’s journey in the coming years.

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