Marico Ltd - Quarterly Update: Q2 FY25

This update seeks to provide an overall summary of the operating performance and demand trends witnessed during the quarter ended 30th September, 2024. A detailed Information Update will follow this once the Board approves the financial results for Q2 FY25.

The sector witnessed stable demand trends with rural outperforming urban on a year-on-year basis for the third quarter in a row.

In the given context, the domestic business posted mid-single digit volume growth, exhibiting improvement on a sequential basis. Parachute Coconut Oil posted close to mid-single digit volume growth, partially impacted by ml-age reduction in one of the key price-point packs in lieu of a price increase. The brand recorded double-digit revenue growth, aided by pricing interventions made at the start of the year. The brand has taken another round of price increase at the end of this quarter given the sequential rise in copra prices. Saffola Oils posted low single digit revenue growth, while the pricing cycle for the brand turned slightly favourable after 8 quarters. Value Added Hair Oils was subdued amidst competitive headwinds in the bottom of the pyramid segment, but we expect gradually improving demand trends ahead on the back of visible ATL investments and brand activations across key franchises. Foods and Digital-first brands sustained their visibly strong momentum and scaled up well ahead of aspirations, thereby maintaining the pace of diversification as envisaged.

The International business delivered robust low teen constant currency growth with each of the markets contributing positively. Bangladesh posted high-single digit growth, demonstrating the strong resilience of our business model amidst a challenging operating environment which has now largely stabilized. Vietnam also grew in high single digits, while MENA and South Africa maintained their robust double digit growth trajectory.

Consolidated revenue growth remained in high single digits, as higher realisations in the domestic business was offset by incremental currency headwinds in some overseas markets. We expect consolidated revenue growth to move into double digits in the second half of the year.

Among key inputs, copra prices rose ahead of internal forecasts and the recent import duty hike led to vegetable oil prices moving higher towards the end of the quarter. Crude oil derivatives, however, remained rangebound. We expect gross margin to moderate on a year-on-year basis owing to partial absorption of higher input costs, as the Company prioritized expanding its consumer franchise in the current demand environment. Consequently, we expect a moderate lag in operating profit growth vis-à-vis revenue growth on a year-on-year basis.

The Company expects to deliver double-digit revenue growth in this year. In view of the higher-thananticipated degree of inflation in copra prices, sharp import duty hike in vegetable oils and potential uncertainty in crude oil prices in the wake of recent geo-political tensions, the Company will focus on its stated revenue growth aspiration while remaining watchful on the margin front during the second half of the 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. 693.40 as compared to the previous close of Rs. 696.35. The total number of shares traded during the day was 33718 in over 2165 trades.

The stock hit an intraday high of Rs. 697.75 and intraday low of 685.00. The net turnover during the day was Rs. 23253917.00.

Source : Equity Bulls

Keywords

Marico INE196A01026 QuarterlyUpdate Q2FY25