Marico Ltd - Quarterly Update - Q4 FY24

This update seeks to provide an overall summary of the operating performance and demand trends witnessed during the quarter ended 31st March, 2024. A detailed Information Update will follow this once the Board approves the financial results for Q4 FY24.

During the quarter, FMCG demand sentiment stayed consistent vis-à-vis the preceding quarters with trends in urban and rural consumption largely converging.

In Q4, the domestic business posted a slight uptick in volume growth on a sequential basis owing to steadying trends in majority of the portfolios. Parachute Coconut Oil registered low single-digit volume growth as we witnessed a continuing revival in loose to branded conversions amidst firming up of copra prices, which was along expected lines. Saffola Oils delivered mid-single-digit volume growth as trade-led headwinds subsided with input and consumer pricing exhibiting stability. Value Added Hair Oils had an optically weak quarter, declining on a high base amidst persistent sluggishness in the bottom of the pyramid segment. Foods continued its steady run to close the year at ~4x of its scale in FY20 and Digital-first brands also sustained its strong growth trajectory, thereby meeting our stated portfolio diversification objective for the year.

Amidst the backdrop of improving macro-indicators, we expect a gradual uptick in the growth of our core categories through the ongoing initiatives to enhance the profitability of our General Trade (GT) channel partners and focused investments towards a transformative expansion in our direct reach footprint across urban and rural outlets over the next couple of years. We will continue our focus on driving differential growth in our urban-centric and premium portfolios through the organised retail and E-Commerce channels. We will continue to aggressively diversify the portfolio through the accelerated scale up of Foods and Digital-first brands and improve profitability parameters in line with our medium-term strategic priorities.

The International business reverted to clocking double-digit constant currency growth, led by Bangladesh bouncing back from transient headwinds and rest of the markets maintaining their positive momentum.

Consolidated revenue grew in low single digits, moving back into positive territory after 3 quarters, due to incremental anniversarizaton of pricing cuts in key domestic portfolios. We expect consolidated revenue growth to trend upwards, with domestic revenue growth outpacing volume growth in the quarters ahead.

Among key inputs, copra prices inched up in line with forecasts, while edible oil and crude oil derivatives remained stable. In this context, we expect strong gross margin expansion on a year-on-year basis. We also maintained investments behind brand building 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. 509.40 as compared to the previous close of Rs. 491.85. The total number of shares traded during the day was 116197 in over 3889 trades.

The stock hit an intraday high of Rs. 510.90 and intraday low of 492.80. The net turnover during the day was Rs. 58617911.00.

Source : Equity Bulls

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Marico INE196A01026 Q4FY24 QuarterlyUpdate