Marico Ltd - Quarterly Update - Q3 FY24

This update seeks to provide an overall summary of the operating performance and demand trends witnessed during the quarter ended 31st December, 2023. A detailed Information Update will follow this once the Board approves the financial results for Q3 FY24.

During the quarter, the FMCG sector exhibited similar demand trends on a sequential basis, with urban markets staying steady and rural offering little to cheer. In addition, constraints on liquidity and profitability in the general trade (GT) channel remained an overhang for the sector, while alternate channels continued to fare well. We remain optimistic of a gradual uptick in consumption trends over the course of the next calendar year on the back of improving macro-economic indicators, continued government spending and conducive consumer pricing across categories in response to a benign input cost environment.

In the given context, domestic volumes grew in low single digits on a year-on-year basis with a slight sequential improvement in our core portfolio. Towards the end of the quarter, we initiated significant steps towards improving the ROI of our GT channel partners and structurally re-igniting growth in the channel. This included a primary stock correction for our channel partners. As a result, Parachute Coconut Oil registered low single digit volume growth with loose to branded conversions trending positively. Saffola Oils had an optically weak quarter owing to a high base and persistently cautious trade sentiment, even while offtakes remained healthy. Value Added Hair Oils posted low single digit value growth amidst sluggishness in the bottom of the pyramid segments of the portfolio. We stayed on course in our diversification journey as Foods and Premium Personal Care scaled up well in line with aspirations.

The International business delivered mid-single digit constant currency growth amidst transient macro headwinds in the Bangladesh market, while the rest of the geographies held strong.

With a degree of pricing corrections in key domestic portfolios yet to anniversarize and significant currency depreciation in select overseas geographies, consolidated revenue declined in low single digits on a year-on-year basis.

Among key inputs, copra and edible oil prices remained at lower levels and crude derivatives also exhibited some downward bias, thereby leading to robust gross margin expansion on a year-onyear basis. A&P spends were ramped up in line with our strategic intent to continually strengthen the long-term equity of both the core and new franchises. Consequently, we expect low double-digit operating profit growth on the back of a healthy expansion in operating margin, thereby staying on track to deliver on the margin guidance for the full year.

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 scale up of new engines of growth.

Shares of Marico Limited was last trading in BSE at Rs. 545.80 as compared to the previous close of Rs. 553.85. The total number of shares traded during the day was 41880 in over 2355 trades.

The stock hit an intraday high of Rs. 557.45 and intraday low of 545.00. The net turnover during the day was Rs. 23089067.00.

Source : Equity Bulls

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Marico INE196A01026 QuarterlyUpdate Q3FY24