Marico rose 1.53% to Rs 362.25 after the company's net profit rose 6.9% to Rs 264 crore on a 8.7% increase in net sales to Rs 1,989 crore in Q2 FY21 over Q2 FY20.
The company said that the revenue growth was accompanied by a robust underlying domestic volume growth of 11% and constant currency growth of 7% in the international business.
Profit before tax in Q2 September 2020 stood at Rs 342 crore, up by 0.3% from Rs 341 crore reported in Q2 September 2019. Total tax expense declined by 21.6% to Rs 69 crore in Q2 September 2020 over Q2 September 2019.
EBITDA grew 10% to Rs 389 crore during the period under review. EBITDA margin stood at 19.6% in Q2 FY21, up 30 bps over the same period last year.
Advertising & sales promotion spend was back to pre-COVID levels at 9.5% of sales, as the company remained invested behind brand building in relevant categories.
The FMCG company said that the core franchises led growth during the quarter with 95% of the portfolio returning to growth trajectory. Traditional channels continued to outperform with rural growing ahead of urban, while in the new-age channels, strong acceleration continued in E-Commerce. Modern Trade (MT) remained subdued and Canteen Stores Department (CSD) continued to witness steep decline.
"With improving consumer sentiment and supply chain operations at near pre-COVID levels, majority of the company's portfolio came back to healthy growth on a year-on-year basis. This was further reflected in a strong delivery in traditional trade and ECommerce, though the company continued to operate at reduced distributor inventory levels to protect channel partner ROIs in the current environment. Input costs have witnessed an uptick, however the impact was contained through aggressive cost saving initiatives and optimization of A&P spends in discretionary categories, thereby enabling an improvement of EBITDA margins to 19.6%, Marico said in a statement.
Parachute Rigids registered 10% volume growth during the quarter, on the back of its leadership position as a trusted brand and accelerated loose to branded conversions. The company expects to grow volumes in the range of 5-7% over the medium term.
After a sharp decline in Q1, Value Added Hair Oils registered a smart recovery and posted a resilient 4% volume growth. The premium segments of the hair oils category continued to face headwinds, however the mid and bottom of pyramid segments have regained traction. The company aims to capitalize on its leadership position in the market to track healthy growth for the rest of the year and deliver stronger performance in H2 compared to Q2.
Saffola Edible Oils continued its stellar run with 20% growth in volume terms. 62% of the growth was attributed to increased penetration on account of new users and increased retention. As consumption patterns eventually normalize, the company expects to sustain high single-digit volume growth over the medium term in this franchise.
In Q2FY21, the domestic business clocked a turnover of Rs 1,508 crore ($204 million), up 8% on a YoY basis, with an underlying volume growth of 11%, as economic activity and consumer sentiment perked up on the easing of lockdown restrictions in most parts of the country.
In Q2FY21, market price of copra was up 11% YoY and up 9% sequentially, primarily due to leaner supplies and lower coconut to copra conversions. For the rest of the year, the Company expects copra prices to remain firm. Correction in prices is expected in Q4FY21 due to seasonal arrivals.
Marico's International business grew by 7% in Q2FY21 in constant currency terms. The business in Bangladesh grew by 16% in Q2FY21 in constant currency terms, thereby shaking off the impact of the pandemic. The South East Asia business de-grew by 4% in Q2FY21 in constant currency terms. The MENA business declined by 6% in constant currency terms. The South Africa business marked a revival, registering a growth of 16% in constant currency terms, backed by robust growth in the Health Care and Hair Care portfolios.
Marico stated that the estimated capital expenditure in FY21 is likely to be around Rs 125-150 crore ($17-20 million). Depreciation during Q2FY21 was Rs 33 crore versus 35 crore in Q2FY20.
The board of directors of the company has declared the first interim dividend of Rs 3 per share. The record date for reckoning the shareholders who shall be entitled to receive the said interim dividend shall be 6 November 2020 and dividend will be paid to the shareholders on or after 25 November 2020.
Marico is a leading Indian group in consumer products in the global beauty and wellness space.
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