Ruchi Soya Industries Ltd. IPO

Patanjali Foods Ltd. IPO - SWOT Analysis

Strengths:

• A solid promoter base with a vision to make Patanjali & Ruchi Soya India’s number 1 FMCG brand in a five year period.
• Brands such as Nutrela and Sunlight across product categories enjoy excellent brand recall, which will help in overall sales growth.
• Fully integrated edible oil refiners in India, with forward and backward integration capabilities available from plantation to refining, allowing it to be more cost-effective than its competitors
• The proceeds from the FPO will be used to retire a Rs 3300 Cr term loan, which will make the company debt-free.

Weaknesses:

• Declining net cash flow: The company had a net decrease in Cash flow of Rs -107 Crs predominantly driven by financing activities.
• Significant dependence on edible oil products sales, which increases concentration risk.

Opportunities:

• Leveraging Patanjali’s technical know-how, expertise and distribution network to grow the combined entity
• Patanjali’s food portfolio can lead to multiple synergies across brands.
• The company has also ventured into the health and wellness space with a launch of a brand of Nutraceuticals under the combined Patanjali and Nutrela brand.

Threats:

• Ongoing litigation proceedings could adversely affect its future business potential and growth
• Changing weather patterns could affect the output generated going forward