Marico Ltd Q4FY24 Performance: Steady Growth with Positive Outlook

Marico Ltd reported a steady performance in Q4FY24, with year-on-year growth in several key financial areas. Total sales for the quarter reached Rs 2,278 crore, reflecting a marginal 1.69% increase compared to the same period in the previous year. This sales growth contributed to a healthy earnings before interest, depreciation, and tax (EBIDT) of Rs 442 crore, representing a notable 12.5% year-on-year improvement. The company’s net profit also rose by 5%, reaching Rs 320 crore for Q4FY24.

The company achieved a significant 420 basis points (bps) expansion in its gross margin year-on-year, indicating a greater efficiency in managing its cost of goods sold. Marico also strategically increased its advertising and promotion (A&P) spends by 8% year-on-year, demonstrating continued investment in brand building and marketing activities. This strategic expenditure, coupled with cost control measures, translated into an impressive 186 bps expansion in the company’s EBITDA margin year-on-year.

Quick YoY comparison

all figures in Rs crore

Favorable Market Conditions and Business Performance

Several factors contributed to Marico’s positive performance. The company benefited from a generally positive macroeconomic context in India. They noted stable trends in both rural and urban markets, with their health and personal care (HPC) and food product categories performing in line with previous quarters. The overall economic growth trajectory remained strong, and the outlook for the future appears promising.

Favorable market conditions further supported Marico’s performance in Q4FY24. These factors included stable retail inflation and favorable consumer pricing across FMCG categories, expectations of a healthy monsoon season in FY25, continued government spending with fiscal prudence, and a sequential improvement in both domestic and overseas businesses. Notably, revenue growth returned to positive territory, driven by a 3% volume growth in the domestic market and a 10% constant currency growth in the international business. The company highlighted that 75% of its domestic business either gained or maintained market share on a moving annual total (MAT) basis, and 100% maintained or increased its market penetration over the same period.

Looking Ahead: Strategic Priorities for Growth

Looking ahead, Marico’s management expressed confidence in the company’s future prospects. They anticipate consolidated revenue growth to trend upwards in FY25, as price reductions in the domestic business were implemented in Q1 of the previous year anniversary. The company also achieved a record operating margin of 21% in FY24, which was in line with their stated expectations.

Marico Ltd outlined several key strategic priorities for the future. Diversification remains a key strategy for growth. They plan to focus on expanding their presence in the foods segment, with the goal of doubling the size of the foods portfolio by FY27 and achieving a 20% compound annual growth rate (CAGR) in the foods business. Recognizing the growing importance of digital channels in the FMCG sector, Marico Ltd also plans to leverage their enhanced digital capabilities to further expand their online presence. The company expects the annual recurring revenue (ARR) of their digital-first brands to double by FY27.

Project SETU is a key initiative aimed at driving growth through a transformative expansion of Marico Ltd’s direct reach. This project focuses on developing a “fit for purpose and fit for future” go-to-market (GTM) model to enhance profitability and gain a competitive advantage. Additionally, Marico Ltd aims to continue achieving market share gains across categories in both rural and urban markets. They plan to achieve this by offering a better product assortment in urban stores, focusing on diversification and premiumization, and strategically reallocating resources to improve coverage and generate demand.

Today, Marico Ltd’s shares were priced at Rs 566.55, reflecting a 6.6% increase compared to yesterday’s closing, attributed to robust financial results. Moreover, trading volume surged by over 24 times. Over the past month, the stock has yielded a return of 14.87%.

Conclusion

Marico Ltd’s financial performance for Q4FY24 demonstrates the company’s ability to deliver consistent growth in a competitive market. The company is well-positioned for continued success in the future, supported by a positive economic outlook, a strong product portfolio, and a clear focus on diversification, digital expansion, and market share growth.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. The information is based on various secondary sources on the internet and is subject to change. Please consult with a financial expert before making investment decisions.