The Food Safety and Standards Authority of India (FSSAI) on Thursday directed Baba Ramdev-led Patanjali Foods to initiate a recall of the entire batch of red chilli powder due to certain concerns over food safety standards.

"The Food Safety and Standards Authority of India vide its Order dated January 13, 2025 (received on January 16, 2025), has directed the Patanjali Foods Limited (“the Company”) to initiate a recall of the entire batch of implicated food (i.e. “Red Chilli Powder (packed)” of Batch No. – AJD2400012 due to non-conformance of The Food Safety and Standards (Contaminants, Toxins and Residues) Regulations, 2011," Patanjali Foods says in an exchange filing.

The company has not issued any further clarification on the matter so far.

Shares of Patanjali Foods Ltd closed 0.44% down at Rs 1,855.30 on the BSE today. The share is trading 8.6% lower as compared to the 52-week high touched on September 4, 2023. At this share price, the company's m-cap stands at Rs 67,160.91 crore.

The company, which is yet to report Q3 FY25 numbers, reported revenue growth of 4% YoY to Rs 8,150 crore, led by 9.6% growth in the edible business. Its food and FMCG business reported a revenue of Rs 2,300 crore, down 7% YoY basis. During the quarter, performance was impacted by unprecedented rainfall and industry-level weak demand. The consumer goods maker's profit rose 21% to Rs 309 crore from Rs 255 crore a year earlier.

Patanjali Foods’ Q2 FY25 EBITDA growth stood at 14%, driven by a recovery in edible oil business profitability but offset by weakness in the food business. Edible oil business revenue grew 10% driven by 5% volume and realisation with the EBITDA margin of 4% (up 454 bps YoY).

"FMCG business performance was weak with a 7% revenue decline and 500 bps margin contraction due to unfavourable product mix. In our view, the FMCG business should witness a gradual recovery going ahead. Additionally, the acquisition of Patanjali Ayurved’s (PAL) home & personal care (HPC) business should add to Patanjali’s growth levers and improve the profitability of its overall business," brokerage Antique Stock Broking said in its analysis post Q2 FY25 results.

Post the Q2 FY25 performance and factoring slower recovery in FMCG business profitability, the brokerage cut its earnings estimates by 3%-11% for FY25-27E and rolled forward its target price to FY27 estimates (earlier H1 FY27). "We maintain BUY recommendation with a revised TP of INR 2,100 (previously INR 2,144), based on 30x PER on FY27E EPS."