Whalesbook
Marico Reports Robust Revenue Growth Amidst Volume Challenges
Marico Ltd. posted consolidated revenue growth in the high twenties on a year-on-year basis for the December quarter. This performance came despite persistent headwinds impacting key segments of its domestic portfolio, including pricing adjustments and high input costs.
Mixed Domestic Performance
The company's India business saw underlying volume growth in the high single digits, a modest sequential improvement. Yet, its flagship brand, Parachute, experienced a marginal volume decline. This was attributed to surging copra prices and preceding price increases. Marico noted that volumes turned positive only when accounting for reductions in product size (ml-age) used to offset price hikes, signaling consumer affordability concerns.
Saffola Oils also registered a muted quarter. Elevated vegetable oil prices continued to weigh on the segment, restricting any significant volume acceleration. The Foods division, while performing benignly in Q3, is projected to regain faster growth momentum in the upcoming two quarters.
Bright Spots and International Strength
Value-added hair oils emerged as a strong performer, with growth in the twenties. This category benefits from sustained traction in mid and premium segments, enhanced by wider distribution under Project SETU and recent GST rate rationalization. Premium personal care and digital-first brands also demonstrated scaling growth.
International operations were a significant growth driver, achieving constant currency growth in the early twenties. Bangladesh led the charge, with Vietnam and South Africa re-entering double-digit growth territory following targeted initiatives. These international gains helped counterbalance slower growth in the domestic market.
Margin Outlook and Cost Factors
Marico indicated that copra prices have corrected by approximately 30% from their peak and are expected to continue trending lower, which should alleviate margin pressure. While gross margins reached their lowest point in the prior quarter, sequential improvement is anticipated for Q3, with further recovery expected due to the lagged pass-through of reduced copra costs. Benign crude oil derivative prices offered some relief, though vegetable oil prices remained elevated.
The company reaffirmed its medium-term strategy focused on volume-led, profitable expansion, supported by its core brands and emerging growth areas. Marico acknowledges that the overall consumption recovery is likely to be gradual.
Marico's share price closed at ₹774.65 on Friday, marking a 2.23% increase.