Marico reported healthy set of numbers for Q3FY19, broadly in-line with consensus estimates. Company reported revenue growth of 14.6% yoy to Rs1,861cr, in-line with the estimates. EBITDA for the quarter was up 15.8% yoy to Rs348.9cr with EBITDA margin of 18.8%, up 20bps yoy (estimate of 19.1%). Thus, company reported PAT of 251.7cr, up 12.7% yoy (estimate Rs252cr).
Domestic business performance:
Domestic business reported growth of 13% yoy. Volume growth for India business was subdued at 5% yoy. Value growth for the quarter was driven by price hikes taken in the core portfolios to counter the input cost inflation over the last year.
During the quarter, rural continued to outpace urban in General Trade (GT). Rural GT sales grew by 12% yoy, while urban GT sales grew by 1.5%. Modern Trade and E-Commerce have been driving growth in the urban sector, MT grew by 46% yoy, while E-commerce (~3% of sales) nearly quadrupled. CSD grew by 12% yoy on a comparable base.
During the quarter, copra price was down 23% yoy (and down 12% sequentially). Other key inputs - rice bran oil, safflower oil, liquid paraffin (LLP) and HDPE (a key ingredient in packaging material) were up 10%, 6%, 18% and 21%, respectively, on yoy basis.
Parachute Rigids reported healthy volume growth of 9% yoy on a high base; value growth was 19% yoy. The flagship brand continued to gain market share, while the low margin non-focused brands (Nihar Naturals and Oil of Malabar) of the Coconut Oil portfolio declined due to increased competitive intensity in select markets. Overall, the Coconut Oil franchise (includes Nihar Naturals and Oil of Malabar) held its volume market share at 59% (Dec 2018 MAT).
Value Added Hair Oils (VAHO) reported 7% yoy volume growth and 19% value growth. The portfolio maintained its volume market share at 34%.
Performance of Saffola portfolio continued to be muted; volume growth for the quarter was only 2% (5% yoy in Q2FY19). Company indicated that the franchisee has started witnessing traction in the modern trade and e-commerce. Company has also upped the media investment behind Saffola. Value growth for the quarter was 8% yoy.
The Healthy Foods franchise grew by 23% yoy in value terms.
Premium Hair Nourishment and Male Grooming continued to exhibit healthy growth, recording value growth of 38% and 13%, respectively.
International business performance:
International businesses reported 11% yoy growth in constant currency terms (led by broad-based volume growth across key markets). Reported international revenue grew by 21% yoy.
Bangladesh (45% of international business) posted 16% yoy constant currency growth (volume up 12% yoy) in Q2FY19.
South East Asia (26% of IB) reported 13% in CC terms. Vietnam continued to post positive growth; up 15% yoy.
MENA region sales (14% of IB) grew by 8% in CC terms; fifth straight quarter of double-digit growth.
Advertising spends for the quarter stood at 8.8% of sales against 9% in Q3FY18 and 9.6% of sales in Q2FY19.
Company retained its volume guidance of 8-10% for FY19E led by healthy market share gains on the back of increased investment in the core portfolio, aggressive new product launches, distribution expansion, judicious pricing and tighter cost management.
Marico Ltd is currently trading at Rs. 365.25, up by 1.1 points or 0.3% from its previous closing of Rs. 364.15 on the BSE.
The scrip opened at Rs. 371.30 and has touched a high and low of Rs. 371.30 and Rs. 361.25 respectively. So far 9,45,485 (NSE+BSE) shares were traded on the counter. The stock is currently trading above its 50 DMA.
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