Marico Q4 Update: Volume Growth Sustains, Falling Input Costs Aid Margin

Marico Ltd. expects to clock mid-single digit growth in domestic volumes in the fourth quarter, with year-on-year consumption trends improving. Volumes grew 4% in the third quarter of the preceding fiscal.

While urban and premium categories were stable, easing of broader commodity inflation bodes well for overall consumption trends, especially in rural markets, the maker of Parachute coconut hair oil said in its fourth-quarter business update.

On the margins front, the company said that its gross margin was expected to expand and "drive reasonable growth" in operating profit as raw material prices fell.

Among key inputs, copra prices remained steady in a favourable zone and edible oils resumed a downtrend, while crude derivatives remained firm.

The increase in volume growth during the January-March quarter comes on the back of strong performances across key categories.

Category-wise

• Parachute coconut oil posted a "high single-digit" volume growth, aided by stable consumer pricing while copra prices remained steady through the quarter.

• Value-added hair oils touched "double-digit" value growth. The category growth consolidated on low base as a result of prevailing muted sentiment in rural and mass personal care categories.

• Saffola oils performance was stable on a sequential basis, however high absolute volume base impacted performance on year-on-year basis.

• Personal care portfolio grew in double digits in Q4.

• The foods and digital-first portfolio continued healthy growth.

The company's international business is expected to report mid-teen constant currency growth. "Each of the markets exhibited resilience despite a challenging global macro environment and currency headwinds in certain market," the company said.

Overall, Marico said its consolidated revenue in the quarter grew in the low single digits on a year-on-year basis.

The company added that it anticipates a more visible and sustained recovery in FMCG demand in the coming quarters based on a variety of improving macro indicators. This, however, is contingent on a healthy monsoon, which is not certain this year.

Shares of Marico fell 5.28% year-to-date. On Monday, it closed 0.06% lower on the BSE as against 0.2% gain in the benchmark Nifty50.