Marico Ltd - Quarterly Business Update for Q3 FY22

Marico Ltd has announced that the quarter was characterised by slowing consumption patterns which affected the sector as a whole.

This was mainly due to continuing inflation impacting overall disposable incomes as well as rising mobility unleashing some degree of pent-up demand for discretionary goods, services and out-of-home consumption.

In the India business, we witnessed similar trends across our categories. Rural demand was also sluggish, albeit optical to an extent, given the high base. Revenue growth in the quarter was in double digits, while volumes were flat, owing to the weaker consumption sentiment and a strong base. However, on a 2-year CAGR basis, volume growth was close to our medium-term aspiration. Parachute Coconut Oil had a muted quarter on a high base. Value Added Hair Oils posted softer growth in value terms in the quarter, but has delivered double-digit value growth on a 2 year CAGR basis. The Saffola franchise grew in high teens in value terms, led by strong 20%+ growth in Foods, which is on course to reach the INR 5 billion mark in revenues this year. Saffola Edible Oils volumes dropped, largely owing to higher in-home consumption in the base and weak trade sentiment due to fluctuating input prices. Premium Personal Care posted broad-based double-digit growth. Digital-first brands, Beardo and Just Herbs, also tracked in line with expectations.

The International business delivered high teen constant currency growth on a healthy base. All markets fared positively, led by Bangladesh and a smart recovery in Vietnam.

Therefore, consolidated revenue growth in the quarter was in low teens.

Among key inputs, copra prices were range bound for most of the quarter before witnessing correction towards the end of the quarter. Edible oil prices have also started softening, while crude oil prices remained firm. We expect gross margin to improve sequentially, but remain lower on a year-on-year basis. Operating margin is expected to be near the levels of the preceding quarter.

Furthering our bid to premiumise the play in value added hair oils, the Company launched Parachute Advansed Onion Hair Oil and Marico Jataa for Men 100% Ayurvedic Hair Growth Oil, thereby broadening its presence in the anti-hairfall segment. Both products have been introduced on the Ecommerce channel.

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.

This update seeks to provide an overall summary of the operating performance and demand trends witnessed in the quarter ended 30th December, 2021. A detailed Information Update will follow this once the Board approves the financial results for Q3 FY22.

Shares of Marico Limited was last trading in BSE at Rs. 514.05 as compared to the previous close of Rs. 512.35. The total number of shares traded during the day was 9597 in over 725 trades.

The stock hit an intraday high of Rs. 518.45 and intraday low of 513.40. The net turnover during the day was Rs. 4949430.00.

Source : Equity Bulls

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Marico INE196A01026 BusinessUpdate Q3FY22