Company Update : Marico Ltd By Motilal Oswal Financial Services Ltd
Mid-teens revenue growth; operating profit to inch up
Below are the key highlights from Marico (MRCO)’s 4QFY25 pre-quarterly update:
Business overview: Mid-teens revenue growth (consolidated)
* During the quarter, the sector experienced stable demand trends amidst the improving trajectory in rural and mixed trends across mass and premium urban segments.
* The domestic business posted a sequential uptick in underlying volume growth with improving market shares across key franchises.
* Consolidated revenue grew in the mid-teens YoY, supplemented by incremental pricing interventions in the domestic business. The company is on track to deliver double-digit revenue growth on a full-year basis.
* MRCO expects gradual improvement in overall consumption sentiment on the back of moderating retail and food inflation as well as forecasts of a normal monsoon.
International business: Mid-teens growth in constant currency terms
* In 4QFY25, MRCO’s international business delivered mid-teen growth in constant currency terms driven by broad-based growth across most markets.
* Bangladesh continued to demonstrate strong resilience with double-digit constant currency growth.
* MENA and South Africa continued their robust double-digit growth momentum.
Costs and margins
* Copra and vegetable oil prices remained firm at peak levels, while crude oil derivatives remained range bound.
* MRCO expects the contraction in gross margin to be largely in line with 3QFY25.
* Despite sharp input cost pressures and continued commitment towards A&P investments, MRCO expects marginal operating profit growth on a YoY basis.
Segments
* Parachute coconut oil experienced transient sluggishness in volumes due to titration in consumption amidst the steep rise in consumer pricing and the impact of ml-age reduction in certain packs. Management expects volumes to pick up gradually. The brand recorded a high teen revenue growth, aided by pricing interventions taken through FY25.
* Saffola Oils registered revenue growth in the twenties, led by pricing interventions implemented during the year.
* Value-added hair oils exhibited gradual improvement on a sequential basis, led by mid and premium segments. The franchise is expected to continue an improving growth trajectory over FY26.
* Foods and digital-first brands sustained their robust momentum, thus keeping the pace of diversification intact.
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