Margins shine

Aug 02, 2019 09:08 IST capital market

Marico Limited is one of Indias leading consumer products companies operating in the beauty and wellness space.

Currently present in 25 countries across emerging markets of Asia and Africa, Marico has nurtured multiple brands in the categories of hair care, skin care, edible oils, health foods, male grooming, and fabric care.

Maricos India business markets household brands such as Parachute, Parachute Advansed, Saffola, Hair & Care, Nihar, Nihar Naturals, Livon, Set Wet, Mediker and Revive among others that add value to the life of 1 in every 3 Indians.

The International business offers unique brands such as Parachute, HairCode, Fiancée, Caivil, Hercules, Black Chic, Isoplus, Code 10, Ingwe, X-Men and Thuan Phat that are localized to fulfill the lifestyle needs of international consumers.

Quarter results

For the quarter ended June 2019, consolidated net sales grew 7% to Rs 2166 crore.

OPM improved 240 basis points to 20.4% which saw OP growth at 21% to Rs 442.00 crore.

Other income increased 17% to Rs 28.00 crore and interest cost increased 33% to Rs 12.00 crore. As depreciation went up 13% to Rs 35.00 crore, PBT increased 21% to Rs 423.00 crore.

Tax grew 19% to Rs 108.00 crore after which. PAT grew 22% to Rs 315.00 crore.

Minority interest was up 75% to Rs 7 crore after which net profit went up 21% to Rs 308.00 crore.

FY 2019 results

In FY 2019, net sales grew 16% to Rs 7334 crore.

OPM improved 10 basis points to 18.1% which saw OP growth at 17% to Rs 1327 crore.

Other income increased 21% to Rs 103 crore and interest cost increased 150% to Rs 40 crore. As depreciation went up 48% to Rs 132 crore, PBT increased 13% to Rs 1258 crore.

Tax grew 8% to Rs 314 crore after which PAT grew 14% to Rs 944 crore.

Prior period tax credit was Rs 188 crore against NIL after which net profit grew 37% to Rs 1132 crore.

Minority interest was Rs 17 crore against NIL after which net profit went up 35% to Rs 1115.00 crore.

Management comments

Commenting on the performance, Saugata Gupta, MD & CEO said, The Company delivered a decent performance in a challenging demand environment for the industry at large. As we hope for a recovery in the overall sentiment towards the second half of the year, we will continue to push for volume driven growth and market share gains. After being constrained during the last two years, margins should see an uptick this year despite higher investments required to support our core franchises as well as fuel the new engines of growth.

Other details

Marico touches the lives of 1 out of every 3 Indians, through its portfolio of brands such as Parachute, Parachute Advansed, Saffola, Saffola FITTIFY Gourmet, Coco Soul, Hair & Care, Nihar Naturals, Livon, Set Wet, Set Wet Studio X, True Roots, Kaya Youth O2, Mediker and Revive. The international consumer products portfolio contributes to about 22% of the Groups revenue, with brands like Parachute, Parachute Advansed, HairCode, Fiancée, Caivil, Hercules, Black Chic, Code 10, Ingwe, X-Men, Sedure, Thuan Phat and Isoplus.

Maricos India Business recorded a turnover of Rs 1,731 crore, a growth of 6% over the same period last year. The operating margin was at 22.6% before corporate allocations.

Maricos International business grew by 7% in constant currency terms in Q1FY20. The operating margin was at 25.6% before corporate allocations.

Parachute Rigids posted volume growth of 9% in Q1FY20. Brand volume offtakes grew at 3x of that of the category, resulting in volume market share gain of 246 bps during the quarter.

Bangladesh grew by 11% in constant currency (cc) terms, led by robust growth in the non- Coconut oil portfolio in line with the stated diversification strategy. Vietnam grew by 11% (in cc terms), led by the Home and Personal Care (HPC) business. Middle East and North Africa declined in double-digits in constant currency terms, on account of one-time trade inventory correction in the Middle East business. Adjusting for the same, MENA grew in low single digits (in cc terms). South Africa grew 6% (in cc terms).

Saffola refined edible oils grew by 3% in volume terms, slowed down further by sluggishness in the traditional urban channel. The brand gained significant traction from the step up in media spends that accompanied a new campaign for the mainstay variant, Saffola Gold. Launched at the start of the calendar year, the campaign messaging was shaped to succinctly communicate its heart health credentials. Saffola wala khana suggests that the one need not hold back on his favourite dishes as long it is cooked in Saffola due to the benefits of lower oil absorption and blend of two oils.

Keeping up the momentum of innovation in Healthy Foods, the Company launched Saffola Perfect Nashta, comprising a range of 3-minute ready-to-cook mixes of traditional Indian breakfasts such as idli, dosa, upma (semolina) and poha (rice flakes), with a perfect balance of traditional spices fortified with 5 essential nutrients.

The response to the Saffola FITTIFY Gourmet and Coco Soul range launched last year has been positive. We will continue to invest towards market development and scale up of the same.


The company will continue to drive sustained profitable volume-led growth over the medium term, through its focus on strengthening the franchise in the core categories and driving the new engines of growth towards gaining critical mass.

Over the medium term, the company retains the target of 8-10% volume growth and healthy market share gains in the India business.

The company aims to build Healthy Foods, Premium Hair Nourishment and Male Grooming into growth engines of the future and expects to deliver value growth at 20% plus CAGR over the medium term in these portfolios.

In the International business, the company expects to clock organic broad-based double-digit constant currency growth over the medium term.

Operating margin is expected to be maintained at 18-19%.


The stock trades at Rs 368

Marico: Consolidated results


1906 (3) 1806 (3) Var. (%) 1903 (12) 1803 (12) Var. (%)
Sales 2166.00 2027.00 7 7334.00 6333.00 16
OPM (%) 20.4 18.1 17.4 18.0
OP 442.00 366.00 21 1275.00 1137.00 12
Other inc. 28.00 24.00 17 103.00 85.00 21
PBIDT 470.00 390.00 21 1378.00 1222.00 13
Interest 12.00 9.00 33 24.00 16.00 50
PBDT 458.00 381.00 20 1354.00 1206.00 12
Dep. 35.00 31.00 13 96.00 89.00 8
PBT 423.00 350.00 21 1258.00 1117.00 13
Tax 108.00 91.00 19 314.00 290.00 8
PAT 315.00 259.00 22 944.00 827.00 14
PPT 0.00 0.00 -- 188.00 0.00 --
PAT 315.00 259.00 22 1132.00 827.00 37
MI 7.00 4.00 75 17.00 0.00 100
Net Profit 308.00 255.00 21 1115.00 827.00 35
EPS (Rs) * # # 7.1 6.4
*Annualized on current equity of Rs 129.09 crore; Face Value: Re 1each
EPS is calculated on PAT
PPT: Prior Period Tax
EPS can not be annualized due to seasonality in business
EO: Extraordinary items PL: Profit to Loss LP: Loss to Profit
EPS is adjusted after EO and relevant tax
Figures in crore,
Source: Capitaline Databases

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