Marico Q1 Results Review - Operationally Inline; Growth Acceleration To Sustain: Motilal Oswal

Motilal Oswal Report

Marico Ltd. reported consolidated revenue growth of 7% YoY (in line) in Q1 FY25. Domestic revenue growth was 7% YoY with volume growth of 4% (3% in Q4 FY24). International growth stood at 5% YoY (10% constant currency growth).

Parachute coconut oil posted 6%/2% YoY growth in value/volume. Volume growth was partially affected by stock adjustments in GT. Volume offtakes grew by 8%. PCNO gained 100 basis points market share.

Value added hair oil revenue was down 5% YoY, affected by persistent weakness in the mass segment. Saffola oil clocked mid-single digit volume growth, but revenue marginally declined 1% due to price cuts. Foods sustained strong growth of 37% YoY.

The premium and urban-centric segments outperformed the rural and mass segments. Rural demand is gradually improving, while urban markets remained stable. The management is optimistic about a growth revival in FY25 and expects double-digit revenue growth, led by volume.

Gross margin hit a 28-quarter high of 52.3%, driven by softer input costs. Ebitda margin expanded 50 bp YoY to 23.7%. Ebitda grew 9% (estimate 10%).

We reiterate our Buy rating on the stock with a target price of Rs 750 (50 times June-26E EPS). We believe that Marico is a good play on volume recovery.

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