Marico’s international business continues to be robust, reporting double-digit constant currency growth
New Delhi: Home-grown FMCG major Marico expects to deliver a double-digit revenue growth in FY25 helped by sequential improvement with price hike and better volume, its MD & CEO Saugata Gupta said.
However, he also mentioned that as far as profitability is concerned there is inflationary pressure on the material inputs in the second half of FY25 and the operating margin should be in the “broad region of 20%” helped by a strong and institutionalised cost management system.
“If you look at the volume growth trajectory every quarter, we have sequentially improved. I think the way we look at it is that we should be able to deliver double-digit revenue growth. Our aspiration is to deliver top quartile volume growth,” Gupta told PTI.
The “diversification journey” of Marico, where it is increasing its play in the food segment, continues to gather momentum and is doing very well, he added.
“For example, food in the last two quarters hit an annual recurring revenue (ARR) of Rs 1,000 crore. We have a digital business, and two of our digital brands have scaled. Digital businesses put together have a very low cash burn,” he said.
Marico’s international business continues to be robust, reporting double-digit constant currency growth.
“And in spite of the fact that there have been some headwinds, we have been able to be resilient in some of the markets like Bangladesh,” Gupta added.
Marico has already taken a price hike in Saffola, due to an increase in the import duty on edible oil by the government last year. However, it may have another round of price hike for its coconut oil brand Parachute, depending on the copra prices.
“So, as far as Saffola was concerned, I think it was necessitated by the import duty hike. And with respect to Parachute, we have taken pricing actions and could take one more round if required,” said Gupta adding “As we move towards Q1 of the next fiscal, we expect copra prices to begin winding down.”
When asked about the current quarter, Gupta said the industry is still facing input cost inflation, though it is softening. Moreover, the tax incentives announced in the recent budget by the government would also help improve the situation on the consumption front, especially in the large urban markets.
“Food inflation is slightly easing,” he said adding “The entire tax breaks that have been given to the middle class (in Budget) will definitely improve sentiment.”
However, Gupta also added that such improvement will happen gradually.
“Some of the tax breaks are welcome and this is something which the government has done for the middle class which definitely boosts consumption. Having said that, that consumption will just not be channelised towards FMCG but different categories also. Also, I believe that food inflation is gradually softening. A combination of both should help in terms of recovery of the urban consumption,” he said.
This will also help in urban consumption definitely for beauty and personal care and foods because some of the disposable income will go towards some parts of the FMCG.
“So this should help in recovering the urban consumption,” said Gupta.
In the December quarter, Marico which owns brands as Saffola, Parachute, Livon – reported a 5.2% growth in net profit and its consolidated revenue from operations was up 15.35% to Rs 2,794 crore.
“One of the reasons, we have been able to do well is that there has been a sequential volume growth every quarter,” he said.
Marico’s core Parachute volume growth has been positive, Gupta added.
