Marico gains after Q1 PAT rises 9% YoY to Rs 464 cr

Marico rose 1.42% to Rs 671.35 after the FMCG company's consolidated net profit increased 8.66% to Rs 464 crore in Q1 FY25 as compared with Rs 427 crore in Q1 FY24.

Revenue from operations increased 6.10% YoY to Rs 2,643 crore in Q1 FY25, with underlying volume growth of 4% in the domestic business and constant currency growth of 10% in the international business.

Profit before tax grew by 6.70% to Rs 605 crore in Q1 FY25 as compared with Rs 567 crore posted in Q1 FY24.

EBITDA stood at Rs 626 crore in Q1 FY25, up 9% as compared with Rs 574 crore in Q1 FY24. EBITDA margin expanded by 50 bps to 23.7% in Q1 FY25 as against 23.2% in Q1 FY24.

 

A&P spends was up 13% YoY, as the company sustained focus on strategic brand building of core and new businesses.

Domestic revenue was at Rs 1,962 crore, up 7% YoY, as volume growth was supplemented by price hikes in the coconut oil portfolio, which more than offset the residual base impact of pricing cuts in the Saffola Oils portfolio. Offtakes remained healthy across key portfolios with more than 90% of the business either gaining or sustaining marketshare and penetration, both on a MAT basis.

The Parachute Rigids registered around 2% volume growth. The volume market share of the composite Coconut oil portfolio reached highest-ever levels at around 64% on MAT basis.

Value-Added Hair Oils declined 5% in value terms amidst persistent sluggishness and competitive headwinds in the bottom of the pyramid segment. Mid and premium segments of franchise continued to fare relatively better.

Saffola Edible Oils delivered mid-single digit volume growth as input and consumer pricing remained stable. Revenue declined marginally on a year-on-year basis, due to the last leg of pricing corrections not factoring in the base. Foods posted robust 37% value growth YoY. Saffola Oats delivered more than 20% growth, while the relatively newer franchises also scaled up on expected lines.

Premium Personal Care sustained its strong growth trajectory during the quarter, led by the Digital-first portfolio. Beardo continued to scale well and is on course to deliver improved profitability in line with expectations. Just Herbs and the Personal Care portfolio of Plix continued to gain traction.

Within the International business, the Bangladesh registered 10% CCG (constant currency growth) as the business stayed resilient and sustained its momentum. South-East Asia was flat in CC terms, as the recovery in HPC demand in Vietnam was offset by a weak quarter in Myanmar. MENA delivered 20% CCG with both the Gulf region and Egypt faring well. South Africa registered 28% CCG driven by the ethnic hair care segment. NCD and Exports posted 14% growth.

On outlook front, the company said, Amidst the backdrop of improving macro-indicators, we expect a gradual uptick in the growth of our core categories in the domestic business through the ongoing initiatives to enhance the profitability of our General Trade (GT) channel partners and transformative expansion in our direct reach footprint under Project SETU.

It aims to grow Foods at more than 20-25% CAGR to 2x of FY24 revenues in FY27. The Digital-first portfolio is expected to exit FY25 at an ARR of Rs 550-600 crore. and scale to 2x of FY24 ARR in FY27. Consequently, it expects the domestic revenue share of the Foods and Premium Personal Care portfolios to expand to approximately 25% by FY27.

While Bangladesh and Vietnam have led from the front, the strong growth momentum in the MENA and South Africa businesses has visibly strengthened the broadbased construct and offers margin upside over the medium term.

The company expects consolidated revenue growth to trend upwards during the course of the year, on the back of an improving trajectory in domestic volume growth, a favorable pricing cycle in key domestic portfolios and healthy growth momentum in the International business.

In the medium term, we aim to deliver double-digit revenue growth through consistent outperformance the category and market share gains in the domestic core portfolios, accelerated growth in the Foods and Premium personal care and double-digit constant currency growth in the International business. We expect operating margin to inch up over the next few years with leverage benefits as well as premiumisation of the portfolios across both the India and International businesses.

Saugata Gupta, MD & CEO, said, We expect to sustain the improving trajectory in the core domestic business on the back of consistent market share and penetration gains coupled with the ongoing initiatives to revive growth in traditional trade and expand direct reach under Project SETU. We will also maintain steadfast focus on the profitable scale up of the Foods and Digital-first brands. The international business has been veritably consistent over the last few years and is expected to maintain its double-digit constant currency growth momentum. We will aim to deliver on each of the key performance parameters and drive healthy revenue-led earnings growth in the near and medium term.

Earlier this month, the company announced that it will collaborate with renowned dermatological solutions provider, Kaya, to advance its play in science-backed personal care. Under this arrangement, the company will have exclusive rights to scale up Kayas range of efficacy-based personal care products outside of its clinics. This key strategic initiative presents a Rs 100 crore revenue opportunity over the next 4-5 years and will add another growth lever to Maricos Premium Personal Care led Digital Business.

Marico is one of India's leading consumer products companies in the global beauty and wellness space. Its portfolio includes brands such as Parachute, Saffola, Saffola FITTIFY Gourmet, Saffola ImmuniVeda, Saffola Mealmaker, Hair & Care, Parachute Advansed, Nihar Naturals, Mediker, Coco Soul, Revive, Set Wet, Livon and Beardo.

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