FMCG powerhouse Marico has recently shared its business performance insights for the January-March quarter, showcasing a remarkable surge in consolidated revenue growth, climbing to the high teens year-on-year. This robust performance is attributed to consistent growth across essential segments, alongside strategic pricing adjustments in its domestic operations. As for the entire fiscal year, Marico anticipates achieving a low double-digit revenue increase, with expectations of sustaining this momentum into FY26.
Strong Q4 Performance Outshines Peers
Industry analysts are optimistic, projecting Marico’s revenue growth for Q4 at an impressive 17-18% YoY, placing it ahead of its competitors. According to Nuvama’s analysis, “We now estimate consolidated revenue and EBITDA growth at 17.6% and 4% YoY, respectively, exceeding our initial forecasts of 16.5% and 3% YoY.” Domestic volumes are expected to see a sequential uptick, with predictions of 6.5% YoY growth in Q4FY25, while international sales may rise by 15% YoY in constant currency terms.
- FY25 Revenue Growth: Projected at 11.8%
- EBITDA Margin: Expected to be 19.8%
- FY26 Outlook: Anticipated double-digit growth driven by easing inflation and favorable monsoon conditions.
Demand Trends and Market Insights
In its regulatory updates, Marico highlighted stable demand patterns in the market during the quarter, particularly in rural areas, alongside mixed trends in urban sectors. The company stated, “We foresee a gradual enhancement in consumer sentiment as retail and food inflation begins to stabilize, supported by predictions of a normal monsoon.”
Insights into India and International Markets
Marico’s domestic segment has shown a positive trend in volume growth, enhancing market shares in critical product lines. Notably, Parachute Coconut Oil experienced temporary volume declines due to increased consumer prices and adjustments in packaging. However, the company anticipates a rebound as consumer pressure eases with a forecasted dip in copra prices.
- Saffola Oils: Achieved significant revenue growth in the twenties, driven by strategic pricing.
- Value Added Hair Oils: Gradual improvements are expected, particularly in the mid and premium segments.
The international sector also demonstrated mid-teen growth in constant currency, largely due to widespread success in several markets. Nomura noted, “The international segment saw mid-teen constant currency sales growth, surpassing our expectations of 12.5% YoY.” Bangladesh, MENA, and South Africa all recorded double-digit growth, although sales in Vietnam may have faced challenges.
Navigating Costs and Margins
Marico reported that prices for copra and vegetable oils remain elevated, while crude oil derivatives have stabilized. The company anticipates gross margin contraction will align with previous quarters. “We have continued to invest aggressively in brand development, supporting our long-term strategy to enhance the equity of our brands,” the company indicated in its filing.
Future Outlook and Strategic Initiatives
Nomura provided an optimistic outlook for Marico, predicting that it will benefit from:
- Raw Material Inflation: Expecting to achieve double-digit revenue growth despite price hikes.
- Newly Entered Categories: Anticipating growth rates of 20-25% for around 20% of its Indian business in the medium term.
- Project Setu: Aiming for a 50% increase in direct market reach by FY27 to boost volumes.
- Margin Recovery: Any near-term margin pressures are expected to be temporary, with improvements anticipated post-copra flush season.
Overall, Nomura forecasts a 13.5% CAGR in EPS from FY25 to FY27, underlining Marico’s potential for sustained growth and market leadership.
