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Informist, Monday, Aug 5, 2024

--Marico: To increase some pdt prices due to higher coconut prices 

--Marico: To increase some product prices in Oct-Mar 

--Marico: Price hikes taken so far will reflect from Jul-Sep 

--Marico: See upside potential in quick commerce, to aggressively pursue 

--Marico: Will be able to maintain margin in FY25 

--Marico: Don't see further expansion in margin in FY25 

--Marico: Gross margin may moderate slightly, but will try to hold 

--Marico: Will launch Kaya pdts in modern trade in Sep 

--Marico: Kaya brand has revenue potential of 1 bln rupees 

--Marico: Increased price of Parachute by 6% 

--Marico: See Parachute volumes growing by mid single-digits Jul-Sep

--Marico: Commodity prices may see mild inflation Oct-Mar

By Avishek Rakshit & Darshan Nakhwa

KOLKATA/MUMBAI – After increasing the price of its Parachute brand hair oil by 6%, Marico Ltd may raise the price further marginally in the coming months to keep pace with the rising cost of key raw material copra, Managing Director and Chief Executive Officer Saugata Gupta said today.

While Gupta did not mention the quantum of increase in raw material prices, in a call with sector analysts he said copra prices are expected to go up further, which will necessitate another round of price hikes.

Gupta said the Parachute mother brand of hair oil is expected to register mid-single-digit growth in Jul-Sep. Marico’s raw material costs were up 11.9% at 11.1 bln rupees during Apr-Jun; and purchase of stock-in-trade, which refers to procurement of finished goods to eventually make the final product, was up 19.7% at 2.1 bln rupees. The official said the price hikes undertaken already will start reflecting in the company’s revenue July onwards.

During Apr-Jun, the Parachute brand of hair oil registered 2% volume growth and gained market share by 100 basis points. The volume market share of the composite coconut oil portfolio, which includes value-added coconut hair oil like Parachute Aloe Vera, reached its highest levels at 64%.

Increasing raw material costs could keep Marico’s margins in check in the current financial year. Gupta said margins may not expand in 2024-25 (Apr-Mar), but the company will be able to maintain the margins recorded in 2023-24. Gross margins, however, may moderate a little.

Gupta said Marico plans to launch the Kaya brand of products, over which it has exclusive distribution rights, in modern trade channels like organised retail in September. Until now, the brand was available via online channels only. This brand, Gupta said, has the potential to generate 1 bln rupees in revenue.

The Apr-Jun period marked the execution of the first phase of its distribution expansion and realignment project in six states representing a mix of stronghold and opportunity markets. The initial results have been promising with direct coverage expansion in urban and rural markets, Gupta said, adding that there is good scope to expand the business via quick commerce, and Marico will be aggressively pursuing this sales channel as a revenue generator.

Asked about the impact on the company of the situation in Bangladesh, Gupta avoided a direct reply. “I can only say in times like these the strong get stronger, and the weak get weaker,” he told investors.

The contribution from Bangladesh to Marico’s global revenue has been on the decline and is projected to fall further. According to the company’s investor presentation, Bangladesh accounts for 44% of its global sales, and this is expected to fall to 40% by April 2027. In 2021-22, Bangladesh accounted for 51% of Marico's global revenues.

Marico posted 8.7% year-on-year growth in consolidated net profit for the June quarter at 4.6 bln rupees. The consolidated revenue increased 6.7% on year at 26.4 bln rupees.

Despite the financial growth, Marico marginally missed the Street’s projections which had estimated the company’s net profit at 4.7 bln rupees with a top line of 26.6 bln rupees.

Shares of Marico closed 1.5% higher at 672.2 rupees on the National Stock Exchange today.  End

Edited by Rajeev Pai

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