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Informist, Monday, Aug. 4, 2025

 

--Marico: Domestic demand trends improved Q1 in both urban and rural markets

--CONTEXT: Comments by Marico's management in post-earnings investor call

--Marico: On track to deliver 25% growth FY26 in India foods segment

--Marico: Don't see more inflation in copra prices, some correction seen now

--Marico: Ad spends cut in Q1 in non-media, no cut in media spends

--Marico: Copra costs currently down around 12% from peak in July

--Marico: Don't intend to take further price hikes in Parachute oil

--Marico: See volume growth in Parachute ahead but margin may be compressed

--Marico:Mkt shr in value-added hair oil gained from large organised players

--Marico: Not greedy about Parachute margin, will balance volume and margin

 

By Rajesh Gajra

 

NEW DELHI – The unprecedented hyperinflationary copra prices, the main input cost in its domestic Parachute coconut oil segment during the June quarter, is likely to cool down going forward, the management of consumer goods company Marico Ltd. indicated to analysts and investor in a post-earnings call Monday. The management does not see more inflation in copra prices and price correction "has started", it said.

 

The Parachute segment, which contributes over a third of the India revenue for the company, recorded a low 1% on-year volume growth in the June quarter but the revenue jumped 31% on the back of price hikes of around 30%, according to the company's earnings investor presentation. The management told investors and analysts it does not intend to take further price increases in the near term and the impact of the price hikes of the June quarter will be seen in the September quarter revenue.

 

Domestic copra prices increased substantially in the June quarter from the trailing quarter "due to the supply-demand gap created by a combination of drop in crop yields due to uneven weather patterns in the first half of 2024, speculative activities, and some unseasonal rains in April and May", the management said in the call.

 

Marico had earlier said its expectation for 2025-26 (Apr-Mar) for the Parachute segment was that copra prices would moderate during the course of the year and volume growth would pick up gradually. Copra prices increased 18% on quarter and 107% on year in the June quarter, taking the company by surprise.

 

Copra prices "went up further in July...and now we are seeing about 10-12% correction from the peak that we had seen in July," the management said in Monday's investor call. Given this trend, the company does "not see any further pricing action" in the domestic Parachute segment, it said. The impact of price increases on revenue growth that the company recorded in the India Parachute segment "will progressively come down" in the second half of the current financial year from the July peak, the management said.

 

The company was, however, confident of revenue growth in the segment from better volume on the back of recent gains in market share, according to the management. The segment margin "will definitely look compressed," but what is important is to look at the absolute growth in operating profit, it said. The company would not be "greedy about margins" in this segment, the management said. 

 

The value added hair oils segment of Marico, which grew 13% on year in revenue in the June quarter, recorded "sustained traction in the mid and premium segment," according to the earnings investor presentation. The management said the market share gains it achieved in this segment were likely to have come from "large organised players". But there was notable help from the company's ongoing distribution and expansion of reach project called 'SETU', it said.

 

The domestic urban and rural demand trends in the June quarter were stable to improving, the management said. Marico's consolidated revenue from operations jumped 23% on year to INR 32.59 billion in the June quarter with underlying volume growth of 9% in the India business and constant currency growth of 19% in the international business.

 

In the India foods segment, which comprises the Saffola brand and others, Marico reported 20% on-year revenue growth in the June quarter. The company said Saffola oats continued to gain market share. In this segment, "we remain on track to deliver over 25% growth this year (FY26) and over the medium-term while steadily improving profitability", the management said in the investor call.

 

Marico's consolidated earnings before interest, tax, depreciation, and amortisation increased 5% on year to INR 6.55 billion but the EBITDA margin declined 360 basis points to 20.1%. The consolidated advertisement and sales promotion expenses rose 25% on year to INR 2.99 billion. The management said that in the June quarter, the company "cut down a lot of non-media spends", and some rationalisation measures were undertaken, along with deferment of "new film shoots",

 

Marico announced its June quarter earnings Monday. The company's consolidated net profit increased 8.6% on year to INR 5.04 billion. On Monday, shares of the company closed at INR 723.30, up 1.7%, on the National Stock Exchange.  End

 

Edited by Avishek Dutta

 

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