FMCG company Marico on Friday saw a marginal drop of 0.7% year-on-year in September quarter net profit to Rs 420 crore, below street estimates of Rs 430 crore on GST transition issues. Revenue for the quarter, however, jumped 30.7% y-o-y to Rs 3,482 crore, driven by price hikes in categories such as hair oils, where inflationary pressures were high. Bloomberg consensus estimates had pegged revenue for the quarter at Rs 3,402 crore.
The company’s earnings before interest, tax, depreciation and amortisation (Ebitda) came in at Rs 560 crore for the quarter, up 7.3% y-o-y and in line with street estimates of Rs 559 crore. Both gross margins and Ebitda margins contracted 810 basis points and 350 basis points, respectively, due to high copra prices and brand-building investments (advertising and promotion spends rose 19 y-o-y). Ebitda margins stood at 16.1% in Q2 versus 19.6% reported last year.
The maker of Parachute and Saffola also sees consumer sentiment gradually improving on the back of easing inflation, healthy crop outlook and policy stimulus in the second half. The recent revision of GST rates is expected to further stimulate demand, benefitting nearly 30% of its India business, it said.
In India, the company posted a volume growth of 7%, reflecting healthy demand and recovery trends in the domestic market. The India business contributes around 70-75% to overall revenue. Marico’s revenue from the domestic market stood at Rs 2,667 crore during the quarter, up nearly 35% y-o-y.
“Consolidated and India revenue growth stood at multi-quarter highs. We expect to deliver consistent and competitive growth in the medium term by executing a more focused and channel-specific portfolio and SKU strategy,” Saugata Gupta, MD & CEO, Marico, said.
Marico also said it will continue to “aggressively diversify” in the foods and premium personal care portfolios (including digital-first businesses), aiming to grow foods at over 25% CAGR in the next two years. In Q2, foods grew 12% y-o-y and crossed the Rs 1,100-crore-mark in annualised run rate in terms of revenue. The company’s digital first portfolio, comprising Beardo, Just Herbs and the personal care portfolio of Plix, crossed the Rs 1,000-crore in annualised revenue run rate.
On the global front, Marico’s international business recorded a 20% y-o-y growth in constant currency terms, indicating continued momentum across overseas markets. Revenue from international markets stood at Rs 815 crore, up 19% y-o-y in the September quarter.
Marico also announced a phased three-year plan aimed at expanding its direct distribution network significantly. As part of its long-term strategy, the company plans to increase its direct reach from 1 million outlets in FY24 to 1.5 million by FY27.
The initiative is designed to strengthen Marico’s retail footprint and improve accessibility of its products across markets, the company said.