Having closed Q1FY25 at Rs 2,643 crore in terms of revenue from operations, Marico expects consolidated revenue growth to trend upwards during the course of the year, on the back of an improving trajectory in domestic volume growth, a favorable pricing cycle in key domestic portfolios and healthy growth momentum in the international business. Meanwhile, as its portfolio of the digital-first brands continues to expand with the likes of Beardo, Just Herbs, Plix and Kaya, it expects this business to close FY25 at Rs 600 crore.
With underlying volume growth of 4% in the domestic business and constant currency growth of 10% in the international business in Q1FY25, Marico’s consolidated revenue grew 7%.
Saugata Gupta, MD and CEO, shared that the new fiscal has started on a promising note for both the domestic and international businesses with revenue growth visibly turning a corner. He expects to sustain the improving trajectory in the core domestic business on the back of consistent market share and penetration gains coupled with the ongoing initiatives to revive growth in traditional trade and expand direct reach under Project SETU.
“We will also maintain a steadfast focus on the profitable scale-up of the foods and digital-first brands. The international business has been veritably consistent over the last few years and is expected to maintain its double-digit constant currency growth momentum. We will aim to deliver on each of the key performance parameters and drive healthy revenue-led earnings growth in the near and medium term,” he said.
During the quarter, overall FMCG volume trends in India continued to exhibit gradual improvement on a two-year CAGR basis, with the trajectory in rural bearing more promise, while urban was stable. Both home and personal care (HPC) and food witnessed an uptick, although the pickup over the last six months has been more pronounced in the former. Premium segments continued to outpace mass segments, while alternate channels gained salience visà-vis general trade (GT).
For Marico, domestic revenue stood at Rs 1,962 crore, up 7% year-on-year, as volume growth was supplemented by price hikes in the coconut oil portfolio, which more than offset the residual base impact of pricing cuts in the Saffola oils portfolio. Offtakes remained healthy across key portfolios with more than 90% of the business either gaining or sustaining market share and penetration, both on a MAT basis.
For the company, Q1 also marked the execution of phase 1 of project SETU in six states representing a mix of stronghold and opportunity markets. The project is a structured three-year plan aimed at enhancing the direct presence from approximately 1 million outlets presently to 1.5 million outlets by FY27.
The project is said to be funded internally from some of the savings and the reallocation of resources within the overall sales system as well as cost management across the organisation.
“The initial results have been very promising with direct coverage expansion in urban and rural markets. During FY25, we will scale up phase 1 markets as well as expand into more states,” it said.
Marico’s ad and promotional spends for Q1FY25 stood at Rs 240 crore
Domestic business
Parachute Rigids registered a 2% volume growth. Volume offtakes grew 8% during the quarter. The coconut oil portfolio reached its highest-ever levels at ~64% on a MAT basis. Value-added hair oils declined 5% in value terms amidst persistent sluggishness and competitive headwinds in the bottom of the pyramid segment. Mid and premium segments of franchises continued to fare relatively better.
The value market share of the franchise was up ~60 bps during the quarter and consolidated at 27% on a MAT basis.
Saffola edible oils delivered mid-single-digit volume growth as input and consumer pricing remained stable. Foods posted robust 37% value growth YoY. Saffola Oats delivered more than 20% growth, while the relatively newer franchises also scaled up on expected lines. True Elements and Plix maintained their accelerated growth momentum.
Focus on digital-first brands
In Q1FY25, Marico’s premium personal care business sustained its strong growth trajectory during the quarter, led by the digital-first portfolio. Beardo continued to scale well and is on course to deliver improved profitability in line with expectations. Just Herbs and the personal care portfolio of Plix continued to gain traction, the company shared.
It is expecting to deliver a double-digit EBITDA margin in Beardo this year and aims to replicate the Beardo playbook as it scales the digital-first franchises and achieves a double-digit EBITDA margin in the portfolio in FY27.
Earlier this month, the company announced that it will collaborate with renowned dermatological solutions provider, Kaya Limited, to advance its play in science-backed personal care, for which it will have exclusive rights to scale up Kaya’s range of efficacy-based personal care products outside of its clinics. This key strategic initiative presents a Rs 100 crore revenue opportunity over the next 4-5 years and will add another growth lever to Marico’s premium personal care-led digital business.
International business
Bangladesh registered 10% CCG (constant currency growth) as the business stayed resilient and sustained its momentum. South-East Asia was flat in CC terms, as the recovery in HPC demand in Vietnam was offset by a weak quarter in Myanmar. MENA delivered 20% CCG with both the Gulf region and Egypt faring well. South Africa registered 28% CCG driven by the ethnic hair care segment. NCD and exports posted 14% growth.
Going forward
Amidst the backdrop of improving macro-indicators, the company expects a gradual uptick in the growth of its core categories in the domestic business through the ongoing initiatives to enhance the profitability of general trade channel partners and transformative expansion in direct reach footprint under Project SETU.
“We will continue to aggressively diversify the portfolio through the scale-up of foods and premium personal care portfolios, while improving profitability parameters in line with our medium-term strategic priorities. After successful initiatives towards refinements in supply chain and GTM during FY24, we aim to grow foods at 20-25%+ CAGR to 2x of FY24 revenues in FY27,” it said.
“The digital-first portfolio is expected to exit FY25 at an ARR of Rs 550-600 crore and scale to 2x of FY24 ARR in FY27. Consequently, we expect the domestic revenue share of the foods and premium personal care portfolios to expand to ~25% by FY27,” it added.