FMCG major Marico released its business update for the January-March quarter wherein it said that the company’s consolidated revenue growth moved to high-teens on a YoY basis, as steady growth trends across key segments was supplemented by incremental pricing interventions in the domestic business. For the full year, the consolidated revenue is estimated to deliver low double-digit growth. For FY26 as well, the company is expected to maintain the double digit revenue growth momentum, it said.
Analysing the business update by the FMCG firm, experts and industry estimated Marico’s Q4 revenue growth at around 17-18 per cent YoY, better than peers. In a report, Nuvama said, “We now reckon consolidated revenue/EBITDA shall grow 17.6 per cent/ 4 per cent YoY (versus initial expectation of 16.5 per cent / 3 per cent YoY). Domestic volumes to clock sequential uptick with 6.5 per cent YoY growth in Q4FY25 (our initial expectation at 6 per cent). International business is likely to expand 15 per cent YoY in CC terms (our initial estimate at 13 per cent YoY).” For FY25, it said, Marico is expected to clock 11.8 per cent revenue growth and EBITDA margin of 19.8 per cent. “FY26 shall see double-digit revenue growth due to easing inflation and strong monsoons,” it added.
In a regulatory filing, Marico said that the sector experienced stable demand trends during the quarter amidst the improving trajectory in rural and mixed trends across mass and premium urban segments. “We expect gradual improvement in overall consumption sentiment on the back of moderating retail and food inflation as well as forecasts of a normal monsoon,” the FMCG major stated.
Performance across India and International business
In the given context, Marico’s India business posted a sequential uptick in underlying volume growth with improving market shares across key franchises. “Parachute Coconut Oil witnessed transient sluggishness in volumes due to titration in consumption amidst the steep rise in consumer pricing and impact of ml-age reduction in certain packs. We expect volumes to pick up as the stress on the consumer wallet eases, driven by the seasonal moderation in copra prices from their current unprecedented highs,” Marico said.
Saffola oils clocked strong 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 during the course of next year.
Foods and Premium Personal Care brands maintained their robust momentum and scaled up well-ahead of aspirations, thereby keeping the pace of diversification intact.
The International business, meanwhile, delivered mid-teen constant currency growth driven by broad-based growth across most markets. Nomura said, “International business reported mid-teen constant currency (CC) sales growth, better than our expectation of 12.5 per cent YoY growth. Bangladesh posted double-digit CC sales growth, while MENA and South Africa also grew in double digits. However, we believe Vietnam sales could have remained impacted.”
Costs and margins
Among key inputs, Marico said, copra and vegetable oil prices remained firm at peak levels, while crude oil derivatives remained rangebound. Per the company, the contraction in gross margin is expected to be largely in line with the preceding quarter. “We also sustained aggressive investments in brand building in line with our strategic intent to continually strengthen the long-term equity of our franchises and accelerate diversification. Despite sharp input cost pressures and continued commitment towards A&P investments, we expect marginal operating profit growth on a year-on-year basis in this quarter,” it said in the exchange filing.
To conclude, Nomura said, “We expect Marico to be a key beneficiary of (1) the sharp RM inflation (copra + edible oils) and deliver better-than-peers double-digit + revenues growth in FY26 with India business likely to deliver resilient mid-to-high single-digit volume growth despite sharp double-digit price hikes. (2) We expect its relatively newly entered categories (20 per cent of India biz) to continue to grow at 20-25 per cent + over the medium-term and key brands in these categories to break even in the short term which will aid margin improvement. (3) It has embarked on an aggressive 50 per cent increase in direct reach (Project Setu) by FY27 which we believe will boost volume growth going forward. (4) We expect any margin pressure in the near term to be transient and expect margins to start reviving post the copra flush season in the coming few months. We forecast a 13.5 per cent EPS CAGR over FY25-27F.”