Marico Q2 PAT rises 20% YoY to Rs 423 cr

The FMCG major reported 19.83% increase in consolidated net profit to Rs 423 crore in Q2 FY25 as compared with Rs 353 crore posted in Q2 FY24.

Revenue from operations increased 7.59% YoY to Rs 2,664 crore in Q2 FY25, with underlying volume growth of 5% in the domestic business and constant currency growth of 13% in the international business.

Profit before tax grew by 15.96% to Rs 552 crore in Q2 FY25 as compared with Rs 476 crore reported in Q2 FY24.

EBITDA stood at Rs 522 crore in Q2 FY25, up 5% as compared with Rs 497 crore in Q2 FY25. EBITDA margin reduced by 50 bps to 19.6% in Q2 FY25 as against 20.1% in Q2 FY24.

 

A&P spends was up 8% YoY, as the company sustained investments towards strategic brand building.

Domestic revenue was at Rs 1,979 crore, up 8% YoY, as volume growth was supplemented by price hikes in the Coconut Oil portfolio and favorable reversal in the pricing cycle in Saffola Oils. Alternate channels continued to gain salience vis-vis General Trade.

Parachute Rigids registered 4% volume growth. Volume offtakes grew in high single digits, resulting in around 120 bps gain in market share on MAT basis. The brand recorded 10% revenue growth, aided by pricing interventions made at the start of the year.

Value-Added Hair Oils declined 8% YoY in value terms amidst persistent sluggishness and competitive headwinds in the bottom of the pyramid segment. The franchise gained around 110 bps in value market share during the quarter, as mid and premium segments of the franchise fared relatively better. The growth trajectory of the franchise has bottomed out and we expect gradually improving trends ahead

Saffola Edible Oils delivered flattish volumes, while revenues grew 2% YoY after the pricing cycle for the brand turned slightly favorable after 8 quarters.

Foods posted robust 28% value growth YoY and crossed Rs 1,000 crore in ARR in Q2. Saffola Oats delivered mid teen growth, while the relatively newer franchises fared healthily. It had launched Saffola Masala Millets during the quarter.

Premium Personal Care continued its strong run during the quarter, led by the Digital-first portfolio. The Digital-first brands crossed 525 crore in ARR in Q2. Beardo continued to scale ahead of expectations and is on course to deliver double-digit EBITDA margin this year. Just Herbs and the personal care portfolio of Plix continued to gain traction.

Within the International business, Bangladesh registered 8% CCG (constant currency growth) as the business stayed resilient amidst challenges in the operating environment, which progressively subsided in the latter half of the quarter. The fundamentals and medium-term growth construct of the business remain intact. Vietnam grew 7% in cc terms on the back of a recovery in demand in HPC categories. MENA delivered 43% CCG with strong performance in the Gulf region and Egypt. South Africa registered 20% CCG with both the Hair Care and Health Care franchises faring well. NCD and Exports posted 20% growth.

On outlook front, the company said, The encouraging demand trends in the first half of the year holds promise of an improving trajectory in the second half. 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 direct reach expansion under Project SETU.

We will continue to aggressively diversify the portfolio through the scale up of Foods and Premium Personal Care portfolios, while improving profitability parameters in line with our medium-term strategic priorities. After successful initiatives towards refinements in supply chain and GTM during FY24, we aim to grow Foods at 20-25%+ CAGR to 2x of FY24 revenues in FY27. The Digital-first portfolio is expected to exit FY25 at an ARR of around Rs 600 crore and scale to 2x of FY24 ARR in FY27. Consequently, we expect the domestic revenue share of the Foods and Premium Personal Care portfolios to expand to around 25% by FY27.

After the structural GM expansion of around 800 bps in FY24, we expect a gradual improvement in gross and operating margins of the Foods portfolio as we scale over the medium term. We are on course to deliver double-digit EBITDA margin in Beardo this year. We will aim to replicate the Beardo playbook as we scale the Digital-first franchises and achieve double-digit EBITDA margin in the portfolio in FY27.

The International business has grown from strength to strength in the face of transient headwinds in select regions. We aim to maintain the double-digit constant currency growth momentum over the medium term

Consolidated revenue growth is likely to move into double digits in the second half of the year. Operating margin in the first half has been in line with the corresponding period of the preceding year. In view of the higher-than anticipated degree of inflation in copra prices and sharp import duty hike in vegetable oils, the Company will focus on its stated revenue growth aspiration while remaining watchful on the margin front during the second half of the year.

Saugata Gupta, MD & CEO, said, We closed the first half of the fiscal on a fairly positive note with the growth trajectory of the business heading in the right direction. We have delivered healthy volume-led revenue growth in the domestic business buoyed by sustained market share and penetration gains across core portfolios. Foods and Digital-first brands continued to ramp up impressively and reinforce the diversification agenda. The international business has exhibited remarkable strength despite challenging operating conditions in select markets. We will take calibrated pricing actions in response to the rising trend in input costs, while focusing on achieving our stated growth aspirations for the year.

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.

The scrip shed 0.83% to settle at Rs 628.80 on the BSE.

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