Release Date: July 22, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Revenue from operations stood at INR7,173 crores, showing strong growth.
- Total EBITDA grew by 105.2% year-on-year to INR435 crores.
- PAT nearly tripled to INR262.91 crores with PAT margins at 3.65%.
- Edible oil segment recorded healthy margins of 4.35%, better than the standard range.
- Initiation of acquiring Patanjali Ayurved Ltd's home and personal care business, expected to enhance stability and growth.
Negative Points
- Revenue from the food and FMCG segment declined by INR751 crores quarter-on-quarter.
- Edible oil segment faced downward pricing pressure and a slight dip in demand due to unfavorable weather conditions.
- Employee costs increased by almost 50% due to ESOP allocations.
- Depreciation and other expenditures showed volatility, impacting financial stability.
- Nutraceuticals segment was marginally negative, still not covering costs.
Q & A Highlights
Q: Why is the food business performance weak, and what are the underlying products affected?
A: The food business is divided into Indian foods (e.g., cow ghee, chyawanprash, honey) and consumer staples (e.g., rice, atta, pulses). The drop in performance is due to high inventory buildup by distributors and adverse weather conditions. The margins are expected to stabilize at 11% next quarter as high-margin products recover.
Q: What is the outlook for the nutraceutical business?
A: The nutraceutical business is undergoing a revamp with new product launches and a focus on D2C and e-commerce channels. The target is to achieve INR100-125 crores in revenue this year with a 25% margin. Long-term growth is expected to be 20-25% annually.
Q: Can you explain the volatility in cost line items this quarter?
A: Employee costs increased due to ESOP allocations, while depreciation dropped due to year-end impairments in the previous quarter. Other expenditures reduced due to lower sales. The run rate for depreciation is expected to be INR58-60 crores, and employee costs will be maintained.
Q: What are the plans for palm plantation expansion?
A: The company has 600,000 hectares allocated, with 75,000 hectares already planted. The target is to reach 100,000 hectares in the next three to four quarters and 0.5 million hectares in four years. The focus is on farmer engagement and nursery development.
Q: How is the company managing transportation for palm fruits to crushing factories?
A: Farmers are responsible for bringing fresh fruit bunches (FFB) to the plant, typically using trucks or tractor trolleys. The company ensures zero wastage by utilizing by-products like husk in boilers or selling them in the market.
Q: What is the expected yield per hectare from palm plantations?
A: Currently, the yield is about 2 tonnes of crude palm oil (CPO) per hectare, with a target to increase to 2.5 tonnes. In ideal conditions, yields can reach up to 3.5 tonnes per hectare.
Q: What are the financials and integration plans for the newly acquired home and personal care business?
A: The business includes dental care (INR1,345 crores), skin care (INR725 crores), home care (INR410 crores), and hair care (INR291 crores). Full integration is expected within three to four quarters, with anticipated margin improvements of 100-200 basis points.
Q: What is the volume growth in the edible oil segment?
A: The volume in Q1 FY25 was 574,000 tonnes, down from 622,000 tonnes in Q1 FY24 and 638,000 tonnes in Q4 FY24. The drop is attributed to seasonal low demand during summer months.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
