Marico's net profit surges 17% to ₹360 cr; revenue slide marginally in Q2

FMCG major Marico Ltd announced their financial results for the July to September quarter for FY24 on Monday. During the quarter under review, the company’s consolidated net profit surged 17.26% to ₹360 crore as against ₹307 crore in the same period last year. In the September quarter, the revenue from operations, however, declined by 0.8% to ₹2,476 crore as against ₹2,496 crore in the same period last year.

The company's EBITDA (earnings before interest, tax, depreciation and amortisation) surged by 15% year-on-year to ₹497 crore in the September quarter as against ₹433 crore in the same period last year. The company’s EBIT margin during the period under review, improved by 272 basis points (bps) to 20.1% as against 17.3% in the September quarter last year.

"During the quarter, demand trends in the domestic FMCG sector stayed largely in line with the preceding quarter. While urban sentiment improved sequentially, instances of higher food inflation and uneven rainfall distribution led to a slower-than-expected pace of recovery in rural demand. Packaged foods, given its high urban salience, maintained a healthy growth trajectory and continued to outpace mass home and personal care categories. With commodity inflation largely in check and price cuts implemented across categories, we remain optimistic about a gradual recovery in sectoral volume growth, aided by range-bound retail inflation, the onset of the festive season and continued government spending," says the company.

The company’s volume in the domestic market grew by 3% in the September quarter. "Domestic revenue at ₹1,832 crore, was down 3% on a year-on-year basis, lagging volume growth due to price corrections in key portfolios in the last 12 months. The majority of the portfolio witnessed healthy trends across offtakes with ~85% of the business either gaining or sustaining market share and penetration. Among the sales channels, MT and E-commerce registered high double-digit (20%+) growth, while General Trade declined in low single digits on a YoY basis," says the company.

The company’s international business grew by 13%. The company’s gross margin expanded by 685 bps YoY and 50 bps sequential to reach its highest level in 26 quarters, owing to softer input costs. Notably, the company’s board of directors has declared an interim dividend of 300% (₹3 per share) on its paid-up equity share capital of ₹129.36 crore.

For the domestic market, the company expects a gradual improvement in demand sentiment to reflect in the performance of domestic business in the second half of the year. For the international market, the company expects to maintain strong growth momentum in the second half of FY24 on the back of the broad-based growth construct of the business.  

"On a consolidated basis, we also expect revenue growth to move into the positive territory in the second half of the year as pricing deflation in the domestic business steadily tapers off. Gross margin is expected to expand by ~350-400 bps, which is higher than earlier envisaged, in view of the H1 performance and continued input cost tailwinds. We will also sustain aggressive brand-building investments towards strengthening the equity of the core and new franchises to drive growth. Consequently, we expect operating margin to expand by ~200 bps in FY24," says the company.

The share price of Marico closed 1.07% lower at ₹532.10