Marico’s Q3 Preview: Price Increases Drive Better-than-Expected Sales Growth, Gross Margin Shrinking During December Quarter – Industry News

FMCG major Marico is expected to post better-than-expected consolidated sales growth in the mid-teens in the third quarter of FY25, mainly driven by price increases, brokerage firms said. Morgan Stanley said the company will post third-quarter revenue growth in the mid-teens, ahead of forecasts, as demand trends remain steady with improved rural consumption and steady urban growth. The Parachute maker is expected to report sequential improvement in domestic volume growth, he adds.

This is stated in another Macquarie analytical report Mariko Business performance information for Q3 points to consistent domestic volume growth during the quarter and better-than-expected consolidated sales growth among teenagers. EBITDA growth, it added, should remain broadly at around 5 percent.

Mariko at the end of the 3rd quarter, prices were raised due to copra inflation. In its December quarterly business report, Marico announced that as copra prices remain higher than expected, the company may post a contraction in gross margins year-on-year. “Among key inputs, copra prices held steady at a higher-than-expected level and vegetable oil prices rose during the quarter, while crude oil derivatives remained limited in range. The upward trend in costs is expected to result in a larger-than-expected year-over-year contraction in gross margin as the Company continues to prioritize consumer franchise expansion in the current environment. We also continued to invest in brand building in line with our strategic intent to continuously strengthen the long-term capital of our franchises and accelerate diversification,” Mariko said in a regulatory filing, saying the company is expected to achieve record performance as a result. moderate growth in operating profit compared to last year.

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The FMCG Major said he would focus on the reported volume income growth aspirations while remaining vigilant on the margin front in the near term.

The consolidated business is said to have delivered revenue growth in the mid-teens year-over-year, thus remaining on track for double-digit growth for the full year. InCred Equities said: “On a low base, we expect consolidated sales growth of 14.6 per cent year-on-year driven by price growth in the third quarter of FY25. Volume growth is expected to be 6 percent (sequentially better than 5 percent in the second quarter of fiscal 2025). The partial absorption of the sharp increase in production costs and the continued increase in A&P costs are expected to reduce the EBITDA margin by 198 bps. compared to last year to 19.2 percent.”

The FMCG The firm said its domestic business is showing consistent underlying volume growth with steady market share gains in key franchises. International business, he added, ensured a steady growth of currency among teenagers. Bangladesh continued to show notable strength and resilience with high double-digit sustained currency growth. Vietnam had a soft quarter amid sluggish consumption. MENA and South Africa maintained strong double-digit growth.

Mariko indicators for the 3rd quarter in different segments

The FMCG sector witnessed robust demand trends during the quarter on the back of improved rural consumption and stable urban sentiment compared to the previous quarter. Against this backdrop, Marico’s Parachute Coconut Oil proved resilient to the rising input cost and pricing environment, albeit decelerating slightly in volumes on a sequential basis. The brand has seen low growth in teenagers’ incomes, which has been helped by price interventions during the current year.

Saffola Oils, Mariko notes in its Q3 business report, remain stable in volume despite sharp price interventions in response to rising vegetable oil prices. The brand has shown high growth in teenagers’ incomes.

Value-added hair oils declined slightly due to competition in the bottom of the pyramid segment, although a healthier trajectory in the mid-range and premium segments is contributing to a gradual recovery compared to the previous quarter.

The Foods and Digital-First brands maintained a strong growth rate and continued to significantly outperform expectations.