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- 08 Aug 2022
- ICICIdirect Research
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Marico reports Q1FY23 results
MARICO - 680 Change: 4.00 (0.59 %)News: Marico reported 1.3% revenue growth to Rs2558 crore (Idirect estimate :Rs2565.4 crore) on the back of 3.6% de-growth in India business & 19.5% growth in international business. The dip in India business is mainly due to considerable decline in Saffola edible oil on account of high base. Edible oil volumes were also adversely impacted by elevated prices during the quarter. Moreover, the company has taken price cuts in Parachute hair oil given copra prices are benign from last six months. With the considerable dip in copra prices, gross margins expanded by 401 bps. Operating profit grew by 9.8% to Rs528 crore (Idirect estimate : Rs522.3 crore) & operating margins expanded by 159 bps to 20.6%. Net profit grew by mere 3.3% to Rs376.9 crore (Idirect estimate : Rs382.5 crore).
View: Marico witnessed strong growth in Saffola edible oil in FY21 & H1FY22 due to Covid-19 induced higher in-home consumption. However, extremely high inflation in last six months not only adversely impacted margin in the category but also volumes declined on the back of consumption shifting to smaller SKUs & economy brands. High base of last two years has also been drag on growth. Parachute hair oils growth was impacted in last few quarters due to considerable price cuts given copra prices have been on a declining mode. We believe hair oil segment is saturated with high penetration levels moreover, competitive intensity is also increasing significantly in the category. Though, the company has forayed in multiple categories in foods segment & acquired some digital D2C brands in last two years, the size of these businesses is still relatively small to impact the overall growth of the company. We believe decline in major raw material prices would result in uptick in margins in next few quarter However, we remain cautious on growth prospects in medium term.
Impact: Neutral.