Marico Q2 Results: Profit, Revenue Fall, But In Line With Estimates

Marico Ltd.’s quarterly profit fell but was in line with estimates.

Net profit of the maker of Parachute hair oil and Saffola cooking oil declined 13% sequentially to Rs 316 crore in the quarter ended September, according to its exchange filing. That compares with the Rs 301.7-crore consensus estimate of analysts tracked by Bloomberg.

Highlights (QoQ)

• Revenue was down 4% to Rs 2,419 crore, against the Rs 2,368-crore forecast.

• Operating profit fell 12% to Rs 423 crore, compared with the estimated Rs 413.4 crore.

• Margins stood at 17.5% against 19%, exactly in line with estimates.

Volumes, Marico said, grew across home to personal care categories in the quarter ended September.

Discretionary categories and out-of-home consumption visibly picked up.

On a two-year annualised basis—a measure that strips out volatility of the pandemic-hit FY21—volumes grew 9%, the company said. "Despite moderation in pace of growth, rural outpaces urban during the quarter and on 2-year CAGR basis," the company said in a statement.

Parachute, the company said, continues to lead the way. It grew 7% in volume and 18% in led by increased penetration across markets. Value-added hair oil saw stronger traction in mid and premium segments.

Saffola Foods grew 70%, while edible oils witnessed a muted quarter largely due to volatility in oil prices that led to trade destocking and lower in-home consumption. Marico said it has set a target to achieve Rs 450-500 crore in revenue from the digital-first brand portfolio in two years.

In the international business, Marico delivered 13% constant currency growth, driven by positive trends in all markets, except Vietnam. Vietnam, where a large part of its portfolio is of a discretionary nature, was in the grip of a severe Covid-19 surge and subsequent restrictions, Marico said in an update to the bourses. Revenue rose 3% to Rs. 549 crore sequentially.

On near-term outlook the company said it expects gross margin to sequentially improve in Q3 and Q4 of FY22. It expects to achieve domestic volume growth of 8-10% and sustain gains in market share over the medium term. With 63% market share, Marico is a leader in coconut oil. It's flavoured oats brand—Saffola Oats—comes second with a share of 41%. Raw material inflation and rural sentiment will remain key monitorables.

In comparison, peers Hindustan Unilever Ltd. and Nestle India Ltd., that have witnessed a rise in revenue and profit, termed the current inflationary pressures as “unprecedented”.

Shares of Marico dipped 1.73% after the results were announced, compared with a 1.82% decline in the Nifty 50.