Marico India business delivers 30% plus revenue growth in Q1 FY22

The FMCG company on Friday said overall demand has been trending better since early June.

Marico said healthy momentum in demand witnessed in March 2021 sustained for the first three weeks of April, until the second COVID surge in India hit alarming levels and led to the resumption of lockdown-like curbs in various states. The impact on public health was more severe this time around, as the pandemic also reached the rural pockets of the country. However, Marico said impact on business was lesser than the first wave witnessed last year, as supply chains were evolved enough to cope with localized and staggered lockdowns and retail stores were also allowed to operate for limited number of hours during the day. Demand in South and West India, which are relatively higher salience regions for the company, was particularly slower due to heavier caseloads and extended lockdown restrictions. As COVID positivity rates subsequently dropped to pre-second wave levels, overall demand has been trending better since early June, it added.

The India business delivered 30% plus revenue growth, backed by a robust double-digit volume growth. A marginal correction of the historical revenue skew from Q1 towards the previous quarter (Q4FY21) is imputed into this quarter's performance. Marico's Parachute Coconut Oil delivered ahead of medium term expectations. Saffola Edible Oils posted low double-digit volume growth, despite a high base. Value Added Hair Oils recovered smartly across the entire franchise, albeit on a low base, which was due to billing constraints during most of April last year.

The company's Foods portfolio revenue more than doubled year-on year with the Oats franchise continuing its strong run and recent launches scaling up well in line with medium term expectations. Premium Personal Care (constitutes less than 5% of domestic revenues) also recovered sharply over last year, but ended below pre-COVID levels.

The International business posted constant currency growth in the low 20's on the back of sustained momentum in Bangladesh and broad based recovery across other markets.

The FMCG company expects to see significant sequential improvement in gross and operating margins as key input costs started easing after peaking at the start of Q1. However, Marico said operating margin in the quarter will drop sharply on a year-on-year basis, given the exceptionally high base (due to rationalisation of A&P spends and other overheads in the base quarter) and the arithmetic (high denominator) effect of significant pricing-led growth. Owing to the above, the company expects muted bottom line growth in the quarter.

The company is seeing improving demand trends, as the second wave appears to be receding and the vaccination drive is progressing steadily. While there are apprehensions of a third wave, the company is adequately prepared to tackle any disruptions in the business environment resulting from the same.

The FMCG major said it maintains its aspiration of delivering sustainable and profitable volume-led growth over the medium term, enabled by the strengthening brand equity of its core franchises and new engines of growth reaching critical mass.

Marico is one of India's leading consumer products companies in the global beauty and wellness space. During FY 2020-21, Marico recorded a turnover of about Rs 80.5 billion through its products sold in India and chosen markets in Asia and Africa.

The company reported 17% jump in consolidated net profit to Rs 238 crore on 34% increase in revenue from operation to Rs 2,012 crore in Q4 FY21 over Q4 FY20.

Shares of Marico were down 1.71% at Rs 525.45 on BSE.

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