Marico sees Q2 revenue growth in low twenties

The FMCG company said it expects modest bottom line growth in the Q2 quarter.

Marico said that during the quarter ended September 2021, the FMCG sector witnessed improving demand trends as mobility levels increased with reducing COVID infections and accelerated vaccination drives. Discretionary categories and out-of-home consumption also visibly picked up.

Revenue growth in the quarter was in the low twenties, with volume growth close to double-digits on a 2-year CAGR basis, it added.

The International business delivered double digit constant currency growth as the company witnessed positive trends in all markets, except Vietnam, which was in the grip of a severe COVID surge and stringent lockdown restrictions.

Among key inputs, copra prices corrected further, crude remained firm, while edible oil prices oscillated at higher levels. Gross margin is expected to improve marginally from the previous quarter, but will be under pressure on a year-on-year basis due to much higher input costs over the last year.

"Operating margin is also expected to contract on a year on year basis given the arithmetic effect of significant pricing growth in the topline," Marico said. As a result, the company expects modest bottom line growth in the quarter.

The company 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.

On a consolidated basis, net profit of Marico declined 6.56% to Rs 356 crore on 31.17% rise in net sales to Rs 2525 crore in Q1 June 2021 over Q1 June 2020.

Marico is one of India's leading consumer products companies in the global beauty and wellness space.

Shares of Marico rose 1.85% to Rs 568.20. The stock hit a high of Rs 568.75 and a low of Rs 560.80 so far.

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