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Revenue rises; higher input cost dents margin

Headquartered in Mumbai, Marico Limited is a leading Indian FMCG company with exports to over 25 countries. The company’s product portfolio includes brands such as Parachute, Saffola and Livon.

• In Q2FY25, revenue increased 7.6% YoY to Rs. 2,664cr, as underlying volume grew 5% in the domestic business and revenue in constant-currency terms rose 13% in the international business.

• Domestic business revenue grew 8.0% YoY to Rs. 1,979cr, aided by growth in the domestic rural market. The domestic business continued its improving volume growth trajectory, because of strong trends across the core and new franchises. International segment revenue was up 6.4% YoY to Rs. 685cr.

• EBITDA for the quarter grew to Rs. 522cr, a 5.0% YoY increase, driven by higher revenue. However, EBITDA margin deteriorated 50bps YoY to 19.6%, as cost of sales rose 6.9% YoY to Rs. 1,311cr.

• Reported profit after tax rose 20.3% YoY to Rs. 433cr, aided by non-operating income, up 115.8% YoY to Rs.82cr. • The company expects double-digit revenue growth in H2FY25 in both India and International business.

Outlook & Valuation

The company performed well during the quarter, mainly aided by strong volume growth in the domestic rural market and expected to support further in the upcoming quarter. Marico expects H2FY25 domestic and international business to grow by double digits, which indicates better performance in the near future. However, cost price is expected to be higher due to a rise in input cost, which could dent its margin. Additionally, uncertainty in international business (in Bangladesh) is expected to limit its overall performance in the short term. Hence, cautiously we downgrade our rating on the stock to ACCUMULATE with a revised target price of Rs. 678 based on 48x FY26E Adj. EPS.

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SEBI Registration Number: INH200000345