Today, February 28 morning trade of FMCG company Patanjali Foods Ltd Shares witnessed a 4.61% decline to ₹1,547.90 per share at 12:18 pm. This downturn followed a significant development in the legal notice which was issued by Supreme Court on Tuesday to Patanjali Ayurved and its managing director, Acharya Balakrishna. The apex court’s action stemmed from allegations that Patanjali had going from their promise to not make mistakes “misleading claims” in advertisements for its medicinal products.
Patanjali Foods shares: Controversial Advertisements Trigger Legal Action
The Supreme Court decision prompted by evidence presented by the Indian Medical Association (IMA). In this evidendent which included a Patanjali advertisement published in The Hindu newspaper. This advertisement, alongside statements made during a press conference, purportedly claimed that Patanjali’s products could cure diseases such as heart ailments and asthma. Such claims were perceived as misleading and in violation of previous court orders.
Violation of Court Orders
The court found Patanjali guilty of violating its earlier directive. Which explicitly prohibited the company from engaging in misleading advertising practices. Despite this injunction, Patanjali’s advertisements continued to make unsubstantiated claims regarding the efficacy of its products in treating various medical conditions.
Patanjali’s Response and Regulatory Filings
In response to the Supreme Court’s actions, Patanjali Foods issued a regulatory filing clarifying its stance. The company asserted that the court’s observations did not pertain to Patanjali Foods Limited, which operates independently as a listed entity specializing in edible oil and food FMCG products exclusively. This clarification aimed to dissociate Patanjali Foods from the legal issues surrounding its parent company’s advertising practices.
Patanjali Foods Shares Financial Performance Highlights
Amidst the legal turmoil, Patanjali Foods released its financial performance for the third quarter (Q3FY24) of the fiscal year 2023–24. The company reported revenue from operations amounting to ₹7,910.7 crore. Which indicates a marginal growth of 1.1% compared to the previous quarter. Total income, including other sources, reached ₹7,957.3 crore during this period.
Patanjali Foods shares EBITDA and Profitability Analysis
Patanjali Foods achieved an EBITDA of ₹390.6 crore. Which is reflecting a decline in EBITDA margin to 4.9% from 5.3% in the preceding quarter (Q2FY24) and 5.1% in the same quarter of the previous year. The quarterly profit after tax (PAT) stood at ₹216.5 crore. By representing a decrease from ₹254.5 crore reported in the third quarter of the previous fiscal year.
Export Sales Performance
Despite the domestic challenges, Patanjali Foods reported notable export sales of ₹62.1 crore for the quarter. By contributing to total revenue from exports amounting to ₹266.2 crore for the nine-month period ending in the third quarter of the fiscal year 2023–24.
Conclusion
The legal ramifications of the Supreme Court’s contempt notice have cast a shadow over Patanjali’s advertising practices. This impacts investor sentiment and stock performance. While Patanjali Foods seeks to distance itself from the controversy. The company also faces challenges in upholding its reputation amidst regulatory scrutiny and legal battles, even as it strives to maintain growth and profitability in the competitive FMCG sector.
Disclaimer: The information provided in this article is for informational purposes only. This information should not be construed as financial or investment advice. Investors encouraged to conduct their own research and consult with qualified, certified experts before making any investment decisions.
