Patanjali Foods stock rises as Supreme Court dismisses Rs 186-crore tax demand

In Q3, the company posted a strong 71.3 percent rise in net profit for Q3FY25, reaching Rs 370.9 crore

Shares of Patanjali Foods Ltd edged over a percent higher to Rs 1,847 on February 20, extending gains for a third session in a row, after the company clarified that the Supreme Court had dismissed a tax demand of Rs 186 crore linked to the pre-Corporate Insolvency Resolution Process (CIRP) period.

The tax dispute originated from multiple assessment years, with the Income Tax Department raising the demand, which was later struck down by the National Company Law Tribunal (NCLT) and upheld by the Bombay High Court. The department had challenged the ruling by filing a Special Leave Petition (SLP) before the Supreme Court.

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In a ruling dated January 15, 2025, the Supreme Court rejected the petition, reaffirming the High Court’s stance in favour of Patanjali Foods. The FMCG company stated that it was unaware of the hearing and learned about the dismissal through a tax-related website on February 18, 2025.

With this verdict, the company confirmed that the Rs 186 crore tax liability no longer stands, and no financial impact is expected. The stock reacted positively to the development in early trade.

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In Q3, the company posted a strong 71.3 percent rise in net profit for Q3FY25, reaching Rs 370.9 crore, compared to Rs 216.5 crore a year earlier. Revenue from operations increased 15.1 percent to Rs 9,103 crore from Rs 7,110.7 crore in the same period last year.

Operating performance improved significantly, with EBITDA surging 57.1 percent to Rs 540.5 crore from Rs 344.1 crore in Q3FY24. The EBITDA margin expanded to 5.9 percent from 4.4 percent YoY.

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The company completed the acquisition of its home and personal care (HPC) business on November 1, 2024, broadening its footprint in dental, skin, hair, and home care categories. However, inflationary pressures and high input costs, particularly for palm oil and wheat, dampened overall demand. Patanjali Foods’ exports stood at Rs 67.27 crore in Q3FY25, spanning 29 countries.

Revenue from its food & FMCG segment declined to Rs 2,037.61 crore from Rs 2,498.62 crore a year ago, as lower commodity prices and weak consumer demand weighed on sales. The segment’s EBITDA margin contracted to 7.53 percent from 10.85 percent in Q3FY24, impacted by rising advertising expenses, raw material inflation, and volatility in commodity prices.

At about 9:20 am, shares of the company were trading at Rs 1,836, higher by 0.7 percent from the last close on the NSE.

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