CRISIL reaffirms ratings on bank facilities of Marico

Marico said that CRISIL Ratings has reaffirmed the credit ratings on various bank facilities availed by the company.

CRISIL has reaffirmed its rating on Marico's long-term bank loan facilities at 'CRISIL AAA/Stable' and the rating on short-term bank loan facilities at 'CRISIL A1+'.

CRISIL said that the ratings continue to reflect Marico's leading position across product categories, improving revenue diversity, healthy operating efficiency, and a robust financial risk profile. These strengths are partially offset by the susceptibility of the operating margin to competition and to volatility in raw material price.

Revenue growth for Marico in fiscal 2022 is likely to be supported by recovery in urban demand, sustained performance across its core portfolios of Parachute Coconut Oil, Saffola Edible Oils, Value Added Hair Oils and Saffola Oats, recovery in international markets, better distribution strategy and launches in the Foods category. Despite supply chain related disruption in early fiscal 2021, the company reported healthy growth of 10%, supported by strong growth in Saffola Edible Oils, Foods and Parachute Coconut Oil segments and price hikes in the key portfolios to counter the steep input cost inflation during the year.

Operating margin is expected to sustain in the range of 19-21% supported by cost control measures, calibrated price hikes to offset the commodity inflation, while continuing to actively invest in brand building across the core and new franchises.

Financial risk profile has been healthy, with cash surpluses of over Rs 1300 crore, gearing of 0.14 times and largely unutilised working capital lines. The company is expected to have minimal debt of approximately Rs 150 crore which is majorly short-term debt to fund its working capital requirements. The company's surplus cash may partly be used to enhance in-house capacities and support new product and category launches, besides possible mid-sized acquisitions.

Marico is a prominent FMCG company, with diverse product portfolio including coconut oil, hair oils, premium refined edible oils in consumer packs, premium hair care, healthy foods and male grooming in India. The company also has presence in the hair care, healthcare and male grooming segments in Bangladesh, the Middle East, North Africa, South-east Asia, and South Africa.

For the Q1 of fiscal 2022, Marico reported Rs 2525 crore in revenue (Rs 1925 crore in Q1 of fiscal 2021) and recurring PAT of Rs 356 crore (Rs 331 crore for Q1 of fiscal 2021).

The scrip shed 0.69% to currently trade at Rs 520 on the BSE.

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