Patanjali Foods, the maker of Ruchi Gold edible oil, reported a substantial increase in profit for the second quarter, as a significant reduction in expenses helped offset the decline in revenue caused by lower edible oil prices. The company’s Q2 profit surged to ₹255 crore ($30.63 million), up from ₹112 crore in the same period the previous year.
This impressive growth in profit was primarily attributed to a more than 23% drop in raw material costs, which significantly contributed to a reduction of over 10% in Patanjali’s total expenses, totaling ₹7511 crore. This cost-saving measure managed to offset an 8% decline in the company’s revenue from operations, which amounted to ₹7822 crore. Notably, revenue from edible oils, constituting 69% of the company’s topline for the quarter, witnessed a decrease of over 13%.
In the edible oil sector, several companies have faced challenges due to India’s record-high edible oil imports and weakening global oil prices. Last week, Adani Wilmar, known for its Fortune brand, reported a loss for the quarter, reflecting the difficulties faced by edible oil companies.
On a more positive note, revenue in Patanjali Foods’ food business, which includes Patanjali-branded biscuits and the “Nutrela” line of products spanning from wheat flour to honey, rose by approximately 5.5%. Patanjali Foods CEO, Sanjeev Asthana, expressed optimism in a statement, suggesting that the upcoming festival season and increased consumer spending will drive growth in the next quarter.
Consumer companies in India had initially grappled with weak rural demand during the first two months of the July-September quarter due to surging inflation and delayed monsoons. However, the situation improved with the easing of food prices and improved rainfall in September, as indicated in a NielsenIQ report.
Patanjali Foods’ shares closed 1.15% higher ahead of the earnings announcement, contributing to an overall year-to-date increase of 22%. The company’s strong Q2 performance, driven by cost-cutting measures, reflects its resilience in the face of challenging market conditions.
As the festival season approaches, Patanjali Foods is well-positioned to benefit from increased consumer spending, making it an interesting company to watch in the coming quarters.