- 06 Jul 2022
- ICICIdirect Research
MARICO INDIA BUSINESS DECLINES IN MID SINGLE DIGITS
MARICO - 630 Change: -1.80 (-0.29 %)News: Marico's India business volumes declined in mid-single digits, dragged by a sharp double-digit drop in Saffola Oils. Excluding Saffola oils, the India business posted marginal volume growth. Parachute Coconut Oil recorded a minor volume decline. Value added hair oils grew in low single digits in value terms despite weak consumption sentiment, especially in rural. Foods also had a slow quarter. Premium personal care posted robust growth across all segments of the portfolio. Digital-first brands remained on track and met internal aspirations. The international business maintained its strong momentum, delivering high-teen constant currency growth
Views: Saffola oils volume declined as the brand had to contend with high in-home consumption in the base quarter and significant downtrading visible from super premium to mass segment in edible oils. Foods witnessed slow growth due to high in-home consumption base in oats and sharp decline in immunity-led categories like honey, among others. Gross margin is expected to expand YoY since copra prices reduced and edible and crude oil prices cooled down to some extent but remain the same on a QoQ basis as the company consumed higher cost inventory in this quarter. Operating profit margin is expected to expand, leading to reasonable operating profit growth on YoY basis. Net profit growth is expected to lag operating profit growth due to an increase of 250-300 bps in the effective tax rate in FY23, due to expiry of fiscal benefits in one of the manufacturing units
Impact: Neutral