Patanjali stocks too face turbulence in market

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New Delhi, February 4

In the slipstream of the bigger crash of Adani Group stocks, the slide in scrips of Patanjali Foods has gone unnoticed. Over the five days this week, its shares have slid by over 16 per cent, touching a year-long low of Rs 700 as against a high of Rs 1,495 barely four months back.

Analysts are pointing at two reasons for fall, both related to market conditions and not allegations of stock market manipulation, as has been the case with the Adani Group. The first reason is said to be the underwhelming quarterly results for December.

Patanjali Foods said its revenue during the quarter rose 26 per cent on a year-on-year basis which was not what the market had expected. The drag due to lower rural demand estimated at 7 per cent led to gross profits declining by over 12 per cent and margins contracting to 2.1 per cent from 4.6 per cent in the same quarter last year. These figures set the shares on a downward trend.

What may have accentuated matters is the Centre's decision to discontinue the import of crude soybean oil under the tariff rate quota (TRQ) from April 1, 2023. Under the tariff rate quota of 20 lakh tonnes, Patanjali and companies in the edible oil business could import a specified volume of the oil at nil duty. After the quota is reached, normal import duty is applicable.

Patjanjali as well as its competitors have now been deprived of the opportunity of importing part of the oil at nil duty which would drive the input cost higher and impact consumption in this segment. The crash of Adani Wilmar stocks may also have been partly due to this reason.

The Tribune