Patanjali Foods shares hit record high as firm to buy Patanjali Ayurved's non-food business

Shares of Patanjali Foods Ltd hit a record high today after the Baba Ramdev-led firm’s board approved the proposal to buy its parent company Patanjali Ayurved's home and personal care business for a lump sum valuation of Rs 1,100 crore.

Patanjali Foods shares gained 4% to a high of Rs 1769.15 today compared to the previous close of Rs 1699.65 on BSE. Shares of Patanjali Foods opened higher at Rs 1750.05 on BSE. Patanjali Foods shares have gained 44.17% in a year and risen 9.16% since the beginning of this year. Total 1.16 lakh shares changed hands amounting to a turnover of Rs 20.13 crore on BSE. Market cap of the firm rose to Rs 62,140 crore. 

Patanjali Foods shares have a beta of 1.3, indicating very high volatility in a year.

In terms of technicals, the relative strength index (RSI) of the Patanjali Foods stock stands at 72.2, signaling it's trading in the overbought zone. Patanjali Foods stock is trading higher than the 5 day, 10 day, 20 day, 50 day and 100 day, 150 day and 200 day moving averages. 

"The board of Patanjali Foods Ltd has approved the proposal of Patanjali Ayurved Ltd's to acquire its Home and Personal Care Business, accelerating the company's transition into a leading FMCG company. The HPC business of PAL currently has a strong brand equity in India's FMCG space and enjoys a loyal consumer base across the country. It presently caters to four key segments, being (i) dental care, (ii) skin care, (iii) home care, and (iv) hair care," the company stated in an exchange filing.

"The transfer has been mutually negotiated for a lump sum consideration of Rs 1,100 crore, which shall be subject to customary closing date adjustments and on such other terms as set out in the business transfer agreement," it also said.

Separately, a 20-year licensing arrangement for a 3 per cent turnover based fee along with other conditions has been agreed between the company and Patanjali Ayurved, the company added.

"The acquisition will lead to a consolidation of 'Patanjali' brand FMCG products portfolio. The acquisition will bring along with it multiple key synergies in terms of brand equity and enhancements, product innovations, cost optimisation, infrastructure & operational efficiencies and positive impact on market share," it mentioned.

 

 

In an exclusive interaction with Business Today TV, Sanjeev Asthana, CEO of Patanjali Foods said that the hair, dental and skincare portfolio to Patanjali Foods in next two to three-months period. Patanjali Foods may see an Ebidta addition of Rs 500 crore with this acquisition along with workforce, brands, patents and distribution network for these products, said Asthana.

Patanjali Foods' management expects to 200 basis points of Ebitda margin and about Rs 2,700 crore revenue addition from this portfolio in the next 18 months on the back improved supply chain, distribution and consolidation of the portfolio. Asthana expects 50-50 per cent split between FMCG and edible oil business portfolio in the next three years.