Marico Ltd - Quarterly Update - Q2 FY21

The quarter was characterized by a partial revival of consumer sentiment, which also reflected in the company's performance across portfolio and channels. Rural continued to perform better than urban aided by Government's focused relief packages, relatively lower impact of the pandemic, the resilience of the agricultural sector in a declining GDP context and the consumption shift due to reverse migration of labour. Although there were intermittent supply chain disruptions across locations due to localized lockdowns, the distribution network has rebounded back to near pre-COVID levels. Traditional trade and Ecommerce continued to drive growth. While Modern trade fell behind, it did improve sequentially. CSD continued to witness steep decline.

India business witnessed signs of revival in consumer demand in the core categories contributing more than 90% of the business and registered robust volume growth in the quarter. Parachute reaffirmed its strong brand equity and clocked growth ahead of medium-term aspirations. Saffola edible oils continued its stellar run and delivered strong volume growth in line with past few quarters. Value Added Hair Oils showed resilience and returned on a growth trajectory in the quarter from a sharp decline in Q1. Foods portfolio, riding the tailwind and on the back of innovations, continued its momentum and registered exponential growth in line with the company's near-term expectations. Discretionary portfolios of Premium Hair Nourishment and Male Grooming performed better than Q1 but continued to face headwinds.

New products launched in the health and hygine segment are tracking well across most channels. The Company has strengthened its position in the Healthy foods and Immunity-boosting segment with the launch of the Saffola ImmuniVeda range.

The international business has clocked mid-single digit constant currency growth. Bangladesh continued to lead from the front with double digit growth while other markets have shown improvement sequentially.

During the quarter, the company upped the investments behind brand building and advertisement spends were back to pre-COVID levels. Although the key raw materials have seen an inflationary trend towards the end of the quarter, we expect to deliver healthy earnings growth on the back of a robust volume growth and a host of cost saving initiatives.

As lockdown restrictions are progressively easing, the Company maintains a positive outlook for the rest of the year provided the ongoing health crisis does not escalate further and economic activity revives steadily. Given that the medium term potential of the franchises remain firmly intact, we believe the Company is on track to deliver sustained profitable volume-led growth, through focus on strengthening the franchise in the core categories and driving the new engines of growth towards gaining critical mass.

Shares of MARICO LTD. was last trading in BSE at Rs.361.85 as compared to the previous close of Rs. 362.85. The total number of shares traded during the day was 34991 in over 1297 trades.

The stock hit an intraday high of Rs. 367.75 and intraday low of 359.7. The net turnover during the day was Rs. 12678402.

This update seeks to provide an overall summary of the operating performance and demand trends witnessed in the quarter ended 30th September, 2020. This will be followed by a detailed Information Update once the Board approves the financial results for Q2 FY21.

Source : Equity Bulls

Keywords