Human wants are unlimited and Indian fast-moving consumer goods (FMCG) try tapping the most of it. The industry has sustained a growth rate of 7%-9% over the FY 2023-24. One of the giants of this fast-paced industry is Marico Ltd. The company was established in 1990. Recently, in an exchange filing, the company presented its Q1 updates and management commentary.
The share market welcomes healthy FY 2024-25 Q1 business updates of Marico Ltd with a 6% surge on Monday, July 8. Read the article to know more about Marico Ltd and this surge.
About Marico Ltd.
Parachute hair oil, Saffola edible oil, Beardo, and Livon serum are some of the most known brands of our day-to-day life. These products are all classified under a single brand name – Marico Limited. The company mainly deals with different categories, such as:
| Category | Products |
| Healthy Food | Saffola edible oil, Saffola oats, Saffola FITTIFY Gourmet Range |
| Male grooming | Set Wet, Beardo |
| Hair care | Parachute, Nihar Naturals, Livon Serum, Hair & Care |
| Skin Care | Parachute advansed, Kaya Youth |
Source: Marico
The company also has a unique set of products – Digital First Brand. These are prominent new additions to the company that it is focusing on.
The company spans over 25 different countries, mainly in the emerging markets of Asia and Africa. The company exports to countries like Bangladesh, Vietnam, Egypt, Malaysia, South Africa, etc.
The company boasts its market saying that every 1 in 3 Indians uses Marico products.
The market listings for the company are:
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Marico Q1 FY 2024-25
The company is bullish on expanding its reach to 1.5 Million new outlets by 2027. The pricing cycle is expected to be in the favour of Marico for FY 2024-25, and thus its revenues are expected to experience a double-digit growth in FY 2024-25.
The first quarter of FY 25 has recently ended, and the quarterly results and management commentary suggest a positive outlook for the company. Here are some key highlights of the Q1 FY 2024-25 report:
- Domestic business has surged in terms of volume moderately.
- Some top product-wise updates:
- Parachute – Low single-digit volume growth
- Saffola edible oils – Mid-single-digit volume growth
- Value Added Hail Oils (VAHO)- soft growth, competitive market
- International business marked double-digit growth in the constant currency.
- Consolidated revenue in high single digits
- Collaboration with Kaya Ltd for advancing in science-based personal care
Marico Financial Performance
The year-on-year PAT growth was 14%, while the domestic volume growth was 3% in FY 24. Marico Ltd. is slowly and steadily trying to reach an effective profit level in FY 2024-25.The contribution of different products in the domestic revenue of the company for FY 24 were approximately as follows:
- Parachute coconut oil =34%
- Saffola edible oils = 20%
- Value Added Hair Oils (VAHO) = 21%
- Other = 25%
However, the company experienced weak financial performance for the last 2 quarters. To understand this growth, previous financials of the company will provide the base.
| Particulars | Q4 FY 2023-24 | Q3 FY 2023-24 | Change (%) |
| Revenue | 2278 | 2422 | (8.4%) |
| Operating Margin | 442 | 513 | (13.8%) |
| Profit After Tax | 399 | 495 | (19.3%) |
| EPS | 2.46 | 2.96 | (16.8%) |
Some of the market indicators to look for are as follows:
| Price-to-Earnings Ratio (P/E) | 56.1 |
| Price-to-Book Value Ratio (P/B) | 21.6 |
| Return on Equity (ROE) | 38.8% |
| Return on Capital Employed (ROCE) | 43.4% |
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Marico share prices surge 6%
On Monday, July 8, after the Q1 commentary was updated, the Marico share price on NSE rose by 6% at 9:55 a.m. At this point, NSE Marico got its high at ₹655. However, after that, the share price has been stable around the level of ₹641 for the day. It closed at ₹640.05 for the day, with nearly 1.2% high.
Source: Cogencis iINVEST (NSE)
Future Outlook
The management has shown splendid confidence in its commentary regarding Q1 results. It is expecting positive future aspects in the gloomy past financials, such as:
- The surge in domestic volume growth and favourable pricing cycle would lead to upward revenue growth.
- Gross margin expansion is positive on a year-on-year basis.
- Operating margin to grow at a better rate than revenue growth rate.
- Double-digit earnings before interest, tax, and depreciation & amortisation (EBITDA) margin in FY 25.
- Diversification of portfolio by scaling up in foods and premium personal care products.
- 20% CAGR in foods till FY 2026-27.
This short SWOT analysis for Marico Ltd would indicate the overall position of the company.
| Strength | Weakness | Opportunity | Threat |
| Strong product positioning in the market. Almost leading with its top products in their respective segments. | Weak financials for the last 2-3 quarters for the company. | FY25 Q1 updates are hopeful to revive the financials for the company. Moreover, the pricing is expected to favour the company in FY 25. | Promoters are decreasing their shareholding. |
| Diversification in the products which usually have been unheeded by other MNCs. | Not able to establish premium category brands in a suitable pricing range. | International business growth of 9% CAGR for FY 24. Strong growth momentum | Highly competitive fields also increase buyer’s bargaining power. |
Bottomline
Marico Ltd has been a prominent market player in the FMCG space for the country. The current market surge of 6% in its share price indicates positive sentiment towards the company’s Q1 results and market commentary. The Q1 updates indicate upward growth in revenues and the domestic business of the company. The financials of the company are still weak. However, its future expansions and FY 2024-25 projections are promising enough to attract investors.
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