Patanjali eyes 5 IPOs in 5 years

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Patanjali, the FMCG brand started by Baba Ramdev, will announce its initial public offering (IPO) plans for five group companies on Friday at a press conference. The IPO plan includes Patanjali Ayurved, Patanjali Wellness and Patanjali Medicine and Patanjali Lifestyle, according to some news reports. The company said the move is to scale new heights of corporate performance.

In 2016, according to CLSA and HSBC, Patanjali was one of the fastest-growing FMCG companies in India. It was valued at `3,000 crore. India Infoline (IIFL) had also said that at least 13 listed companies, including Hindustan Unilever, Colgate, Dabur, ITC and Godrej Consumer Products, will be affected by Patanjali’s success.

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In 2019, Patanjali Ayurveda bought Ruchi Soya for Rs 4,350 crore under the IBC process and named it Patanjali Foods, which is already listed on the stock exchange. Ruchi Soya sells its products under brands like Ruchi Gold, Mahakosh, Sunrich, Nutrela, Ruchi Star and Ruchi Sunlight, which compete with brands from Adani Wilmar and Emami Agrotech in the edible oil space. It is also into oil palm plantations and renewable wind energy business.

Diversifying from the edible oil business and expanding its presence into FMCG, Patanjali Foods acquired biscuits, cookies and rusk businesses in May 2021, and breakfast cereals and noodles business in June 2021 from Patanjali Ayurved. It also launched nutraceutical products in June 2021. Further, during April-June, the company also acquired PAL’s food business, which has over 500 SKUs across eight product categories, including ghee, honey, spices, juices and atta.

According to analysts, this move will reposition Patanjali Foods from a largely commodity-based company to a leading FMCG and FMHG company in India. The company’s strategy to leverage the Patanjali brand and enhance synergies with PAL will further boost the growth, said a recent report from a domestic brokerage. The company is also a market leader in the branded TSP (textured soya protein) space, under Nutrela brand.

“Going ahead, we expect the company to achieve a 22% CAGR growth in its revenues, largely driven by the food business, which is expected to grow nearly 4x on the account of the recent acquisition and scaling up of the same. This shall increase the contribution of the food business to about 20% in FY24 from 14% in FY22. Oils business is expected to grow by 14% CAGR over FY22-24E with higher realisations. The volume growth is expected to be in mid-single digits and better than industry growth as it piggybacks on Patanjali’s vast distribution network,” said the brokerage.

With manufacturing units and headquarters in the industrial area of Haridwar, Patanjali Food and Herbal Park is its main production facility. In 2020, the production capacity of the facility was pegged at Rs 35,000 crore and it had plans of expanding it to a capacity of Rs 60,000 crore through new production units in Noida, Nagpur and Indore.

For the full-year ended March 30, 2022, Patanjali’s revenue rose nearly 9% to Rs 10,664.46 crore against Rs 9,811 crore a year ago. However, net profit was marginally lower by 0.6% to Rs 740.38 crore against Rs 745.03 crore in FY21. The FMCG business revenue climbed to Rs 9,241 crore in FY22 against Rs 8,778 crore in FY21. The ayurvedic products business rose to Rs 1,274 crore versus Rs 925 crore in FY21.