Patanjali Foods slips 5% on SC ruling against Patanjali Ayurved

Shares of FMCG company Patanjali Foods Ltd slipped 5.1% following the Supreme Court's ruling against Baba Ramdev-led Patanjali Ayurved Ltd as it barred the company from advertising or marketing products with misleading claims regarding certain critical diseases. Listed Patanjali Foods, in its defence, has said the SC ruling is related to the ads of ayurvedic medicines of Patanjali Ayurved, not Patanjali Food.

Patanjali Foods, in an exchange filing, says the current ruling will not impact Patanjali Foods Limited (PFL), an independent listed entity that operates in the space of edible oil and food FMCG products only.

"This refers to the latest observations of the Hon’ble Supreme Court of India, relating to the advertisements of ayurvedic medicines of Patanjali Ayurved Limited: The observations of Hon’ble Supreme Court of India do not relate to Patanjali Foods Limited (PFL) which is an independent listed entity and operates in the space of edible oil and food FMCG products only.”

Patanjali Ayurved is not a listed company. The company says the SC’s observations do not have any bearing on the regular business operations or the financial performance of Patanjali Foods Limited.

Meanwhile, the Patanjali Foods stock opened a gap down at ₹1,562.05, falling to an intra-day low of ₹1,536. The stock is currently trading 10.7% down compared to a 52-week high of ₹1,741 on the BSE. The company’s m-cap stands at ₹56,293.82 crore. Patanjali Foods has dipped 3.86% in the past week, and 0.77% in the past month. The share, however, has surged 24.19% in the past six months and is up 68.30% in the past year.

The Supreme Court on Tuesday asked Patanjali Ayurved Ltd to stop promoting and marketing ayurvedic products, which it claims to cure critical illnesses like heart issues and asthma. The SC ruling came following a petition by the Indian Medical Association (IMA), which accused it of claiming to completely cure sugar and asthma, among other illnesses via yoga.

An SC bench of justices, Hima Kohli and Ahsanuddin Amanullah, said the company was taking the “country for a ride” by making misleading claims without “empirical evidence”. The SC also pulled up the government for not keeping a check on such ads. The SC bench said Patanjali can't advertise any product that claims to cure ailments specified in the Drugs and Magic Remedies (Objectionable Advertisements) Act.

Notably, Patanjali Food's quarterly profit after tax in Q3 FY24 (October-December) was ₹216.54 crore vs ₹254.54 crore in the year-ago period, while the profit margin fell to 2.74% from 3.24% YoY. In Q3 FY24, the company's revenue from operations stood at ₹7,910.70 crore, registering a marginal increase over the previous quarter. For 9MFY24, the company’s profit was ₹ 558.83 crore, with a 2.38% PAT margin. In 9M FY24, its revenue was ₹23,499.69 crore, of which food and FMCG sales were ₹6,938.71 crore.