Marico Ltd - Quarterly Update: Q2 FY22

Marico Ltd has provided an update with overall summary of the operating performance and demand trends witnessed in the quarter ended 30th September, 2021. A detailed Information Update will follow this once the Board approves the financial results for Q2 FY22.

During the quarter, the sector witnessed improving demand trends as mobility levels increased with reducing COVID infections and accelerated vaccination drives. Discretionary categories and out-of-home consumption also visibly picked up.

In the India business, we witnessed healthy consumer sentiment across our categories. Revenue growth in the quarter was in the low twenties, with volume growth close to double-digits on a 2-year CAGR basis. Parachute Coconut Oil delivered in line with medium term aspirations. Value Added Hair Oils posted double-digit volume growth. Within the Saffola franchise, Saffola Edible Oils had a muted quarter, largely due to volatility in edible oil prices leading to trade destocking and partly owing to lower in-home consumption. Foods, on the other hand, continued to grow smartly and remained on course to clock INR 5 billion in revenues this year. Premium Personal Care portfolios grew handsomely, albeit on a low base. The digital-first brands, Beardo and Just Herbs, performed in line with expectations.

The International business delivered double digit constant currency growth as we witnessed positive trends in all markets, except Vietnam. Vietnam, where a large part of our portfolio is of a discretionary nature, was in the grip of a severe COVID surge and stringent lockdown restrictions.

Among key inputs, copra prices corrected further, crude remained firm, while edible oil prices oscillated at higher levels. Gross margin is expected to improve marginally from the previous quarter, but will be under pressure on a year-on-year basis due to much higher input costs over the last year. Operating margin is also expected to contract on a year on year basis given the arithmetic effect of significant pricing growth in the topline. As a result, the Company expects modest bottom line growth in the quarter.

After a lukewarm response to Saffola Arogyam Chyawan Amrut, we reworked the mix of the product and launched Saffola Immuniveda Chyawanprash during the quarter. The product is available across e-commerce, modern trade and general trade channels all over India, as well as the Saffola Store direct-to-consumer portal.

The Company maintains its aspiration of delivering sustainable and profitable volume-led growth over the medium term, enabled by the strengthening brand equity of its core franchises and new engines of growth reaching critical mass.

Shares of Marico Limited was last trading in BSE at Rs. 557.9 as compared to the previous close of Rs. 554.1. The total number of shares traded during the day was 51571 in over 2286 trades.

The stock hit an intraday high of Rs. 559.6 and intraday low of 554.15. The net turnover during the day was Rs. 28745642.

Source : Equity Bulls

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