Ramdev Baba's Patanjali Ayurved is now larger than Emami ! It's revenues for 2014-15 are a mind blowing Rs 2,500 cr. You would find a Patanjali Ayurvedic store in almost every known locality in India. And if you have had a chance of taking a sneak peek inside the store you must have noticed, they have a variety of products at their disposal right from soaps, shampoos, cosmetics to food products, medicines and ayurvedic products. The shops, which are apparently like any normal brick and mortar stores are licensed by Patanjali and sell products keeping very less profit margins, as claimed by the company.
Baba Ramdev is known for his yoga. Besides, his opinions have often led to controversies. And Ramdev promoted Patanjali Ayurved (PAL) has captured the attention of stock market analysts, thanks to its meteoric rise over the years.
CLSA, an investment banking company has recently come out with a report ''Wish you were listed: Patanjali Ayurved'. The study shows, Patanjali is bigger than Emami and Jyothy Labs and is perhaps the fastest growing fast moving consumer company in India with revenues in excess of Rs 2,500 crore for 2014-15. The dramatic growth has been achieved in less than a decade.
In past three years, despite tough rivals, Patanjali's revenues have increased four folds. PAL's operating margin is around 20% higher than many of its peers which advertise aggressively.
While most FMCG firms outsource their products and just market, Patanjali played it traditional using the backward integration model. This requires large tracts of land to cultivate and run factories and workshops, thereby investing much more than other players.
Listed FMCG firms are currently trading at an average earnings multiple of 46. With revenues of close to Rs 2,500 crore and an estimated after-tax profit of Rs 300 crore, a similar earnings multiple would give Patanjali a valuation of Rs 14,000 crore.
There are plans to come out with malted food drinks, and interestingly, instant noodles, where Nestle, is the market leader.
Even though Patanjali has spent very little on branding and advertising, Ramdev's sermons and his mass following may have had a positive rub off on the products. In gatherings attended by thousands and interviews with news channels, he has been outspoken on the evils of MNCs, corruption in corporates, and high usage of chemicals in consumer products. However, Baba Ramdev has no stake in the company.