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Marico Limited Q1FY22 Result Analysis and Conference Call Highlights | Invest Yadnya

Marico Limited Q1FY22 Result Analysis and Conference Call Highlights

Published on 03 August 2021 Views 12 Comments 0

Marico Limited announced its Quarterly Results for Q1FY22 on Friday 30th July 2021. Here is the detailed analysis of the Quarterly Result of the Company along with its Conference Call Highlights.

Q1FY22 Result Analysis: Marico limited share price

Q1FY22 Result: Marico limited stock price

  • The revenue of the company has been boosted by 31.2% YoY from Rs. 1,925 Cr. in Q1FY21 to Rs. 2,525 Cr. in Q1FY22. Sequentially, the revenue of the company has gone up by 25.5% from Rs. 2,012 Cr. in Q4FY21.

  • The EBITDA of the company has increased by just 3% YoY from Rs. 467 Cr. in Q1FY21 to Rs. 481 Cr. in Q1FY22. While the EBITDA of the company has increased by a significant 50.8% from Rs. 319 Cr. in Q4FY21.

  • Moving ahead, the EBITDA margin of the company has fallen yearly and risen quarterly. The EBITDA margin of Marico for Q1FY22 is 19% which has contracted by 530 bps YoY from 24.3% in Q1FY21. Whereas, QoQ the EBITDA margin has expanded by 300 bps from 16% in Q4FY21.

  • The company has witnessed a loss on the profitability side on yearly basis. The Profit Before Tax (PBT) of the company has reported a loss of 7.5% YoY from Rs. 505 Cr. in the quarter ended 30th June 2020 to Rs. 467 Cr. in the quarter ended 30th June 2021. Sequentially, the PBT of the company has shown robust growth by 65% from Rs. 283 Cr. in the quarter ended 31st March 2021.

  • The Net Profit attributable to Owners stood at Rs. 356 Cr. in the quarter ended 30th June 2021 down by 6.6% YoY against Rs. 381 Cr. in the quarter ended 30th June 2020. Quarter-on-Quarter, the same has gone up by a significant 62.6% from Rs. 219 Cr. in Q4FY21.

  • The Net Profit Margin of the company stands at 14.1% in Q1FY22 down by 570 bps YoY and up by 320 bps QoQ.

Marico Limited- Q1FY22 Result

Marico Limited- Q1FY22 Result

2) Segment-Wise Revenue & EBIT: Marico company analysis

i) Segment-Wise Revenue: Marico ltd results

  • The revenue from domestic business has increased by a notable 34.6% YoY from Rs. 1,480 Cr. in Q1FY21 to Rs. 1,992 Cr. in Q1FY22. Quarter-on-Quarter, the revenue from the Indian business of the company has increased by 26.6% from Rs. 1,574 Cr. in Q4FY21.

  • The International Business Revenue has increased by 19.8% YoY and 21.7% QoQ from Rs. 445 Cr. in Q1Y21 and Rs. 438 Cr. respectively to Rs. 533 Cr. in Q1FY22.

  • The Revenue Mix of the business show fall of 2% on International Business on yearly basis from 23% in Q1FY21 to Rs. 21% in Q1FY22. Domestic Business contributes 79% to the revenue of the company as of 30th June 2021.

ii) EBIT:

  • The EBIT of India Business stood at Rs. 354 Cr. in Q1FY22 down by 1.1% YoY from Rs. 358 Cr. in Q1FY21. Quarter-on-Quarter, EBIT of India business has increased by 39.4% QoQ from Rs. 13.9 Cr. in Q4FY21.

  • The Internation Business reported growth of EBIT by 11.2% YoY from Rs. 125 Cr. in Q1FY21 to Rs. 139 Cr. in Q1FY22. Sequentially, the EBIT of the company has increased by a massive 67.5% QoQ from Rs. 68.8 Cr. in Q4FY21.

Marico Limited- Segment-Wise Revenue & EBIT

Marico Limited- Segment-Wise Revenue & EBIT

3) Portfolio Performances: Marico ltd stock price

i) Parachute:

  • Volume Growth: 12%

  • Market Share Gain on MAT basis by 80 bps

  • Medium Term Volume Growth Aspiration- 5%-7%

  • Healthy Growth on Core South and West Markets.

ii) Value Added Hair Oil (VAHO):

  • Volume Growth: 34%

  • Market Share Gain on MAT basis by 70 bps

  • Sustain double-digit volume growth trajectory.

  • 20%+ Volume Growth in all key brands.

iii) Saffola:

  • Volume Growth: 24%

  • Market Share Gain in Flavoured Oats: 94%

  • Low double-digit volume growth in Edible Saffola Oils

4) Business Outlook- FY22:

  • Turnover of Food On course to reach Rs. 500 Cr. turnover in FY22

  • E-Commerce market share of more than 25%

  • Double-Digit market share in key Market Trade (MT) Chains of more than 14%

  • Expected Revenue in FY22: Rs. 100 Cr.

  • General Trade (GT) expansion to the rest of the East and parts of the North.

5) Market Share in Key Categories- June 2021: 

Marico Limited- Market Share in Key Categories

Marico Limited- Market Share in Key Categories

6) Quarterly Highlights:

  • The Underlying Volume Growth of the business was 21% in Q1FY22. While the Constant Currency Growth was 21% in the International Business.

  • There was also a marginal correction (2-3% impact) of the historical revenue skew from Q1 towards the previous quarter (Q4FY21).

  • Traditional trade continued to perform well with rural and urban growth in tandem. E-Commerce maintained its accelerated growth trajectory, while Modern Trade could only recover partially as lockdown-like curbs were back into effect in various states. CSD grew on a low basis.

  • The International business posted a strong broad-based recovery relative to the varying levels of impact in each of the markets in the base quarter.

  • The fall in margin was due to a contrast in the cost of inputs consumed in the two quarters, as pricing interventions in the core portfolios could only partially alleviate the inflationary pressure.

  • E-Commerce grew 61%, sustaining its strong momentum. Modern Trade and CSD grew 10% and 56%, respectively.

  • In the International business, Bangladesh clocked 9% constant currency growth. South-East Asia delivered 16% constant currency growth. MENA and South Africa recovered smarty on a low base.

  • Input Cost Status:

  • Copra prices were down 13% sequentially in Q1 due to seasonal arrivals of coconuts and lower demand, prices are expected to remain range-bound in the near term.

  • Crude derivatives such as Liquid Paraffin (LLP) and HDPE were also up 50% and 44% YoY respectively. Both are expected to remain firm in the near term.

7) Strategic Investment: Marico ltd financials

  • The Company announced a strategic investment in Apcos Naturals Private Limited and acquired a 60% stake in the company in July 2021.

  • Apcos Naturals Private Limited owns ‘Just Herbs’ a line of pure, bespoke, and Ayurvedic results-driven skin and hair care offerings, made from certified organic and wildcrafted ingredients collected from across India.

  • The investment is in line with Marico’s strategy to accelerate its digital transformation journey through building scalable digital-first brands, either organically or inorganically, as well as to premiumise its play in personal care.

8) International Business: Marico ltd dividend history

i) Bangladesh:

  • The Bangladesh business clocked 9% constant currency growth on a YoY basis.

  • The newer ranges of Just for Baby (baby care) and Naturale shampoos are trending well.

  • Parachute Coconut Oil and Non-Parachute Coconut Oil portfolio performed well.

ii) South East Asia:

  • South-East Asia (SEA) business grew 16% YoY in constant currency terms on a low base.

  • The Home and Personal Care (HPC) category in Vietnam witnessed recovery on a year-on-year basis.

  • Food Business continued its positive momentum.

iii) Middle East and North Africa (MENA):

  • The MENA business rebounded to 74% growth YoY in constant currency terms on a weak base.

  • It will drive aggressive cost management to enable it to tide over the challenging macros.

iv) South Africa:

  • The South Africa business grew 52% YoY in constant currency terms on a low base, driven by the Health Care portfolio.

9) Change in Management:

  • Mr. Milind Barve has been appointed as an Additional Independent Director of the company for the term of 5 years with effect from August 2, 2021.

  • The Independent Directors of the Company of Mr. K.B.S. Anand and Mr. Sanjay Dube due to personal factors and full-time executive commitments respectively.

Earnings Call Highlights: Marico ltd review

Business Highlights

  • The Back-end Supply Chain was more resilient and business continuity was maintained even during the localized lockdown in the month of April-May due to the second wave of Covid-19.

  • Witnessed improved demand in June which continued in July as well.

  • There has been an impact on Bangladesh and Vietnam Businesses due to the surge in Covid business at the end of the quarter.

  • Witnessed unprecedented change in the input prices like Edible Oils, Copra, and Crude. The management noticed these highest input prices in its history of 10-12 years. The company expects it to cool down by H1FY22.

  • Business Strategy:

  • To maintain strong momentum in its core portfolio and driving premiumization over the medium term.

  • Looking for the opportunity available in the country in Food, Immunity & Nutrition segment in India, where Saffola can play very well.

  • The Company is aggressive enough to reach Rs. 500 Cr. mark and build Rs. 850- Rs. 1,000 cr. portfolio by FY24.

  • Making steady progress in Go-To-Market efforts in rural and urban areas. In Urban Areas, the company is expanding its channels in Chemists and Cosmetics. Rural Reach is expanded by increasing stockists and plans to add the same by 30%-35% in the next couple of years.

  • Continue to invest in enhancing digital capabilities and take the portfolio to Rs. 450 Cr.-Rs. 500 Cr. by FY24. Digital Brands of Marico- Beardo, Just Herbs, Pure Sense, and Coco Soul.

  • The discretionary and Personal Care category of the business contributes less than 5% of the total domestic business. The company plans to grow these as well.

  • The company expects the continuation of growth in rural consumption keeping aside the expectation of the third wave of Covid-19 and other disruptions.

  • Marico gained the first position on ESG Parameters among the FMCG companies in the country.

Saffola Edible Oil:

  • The Saffola Brand has grown by 50%-60% on account of penetration and around 40% from the existing consumers.

  • The Relative Price Index (RPI) of Saffola is the absolute price which states constantly at Rs. 50 for Outlay which has not changed significantly in price terms, but has changed significantly in percentage terms.

  • Despite inflation in the prices, the company enjoyed the benefit of Operating Leverage.

Digital Brands:

  • Beardo's e-Com business is around 50%-60% in the market.

  • The company is largely focusing on the personal care segment in the Digital Businesses.

Cost Management:

  • Continue to use huge analytics and manage resource allocation in both sales and marketing spends.

  • The company has also taken reasonable steps of cost management on Inventory Management, Working Capital, etc., and aims to continue the same.

  • The company currently operates at a very lower number of SKUs, last year there was a reduction of 26% in the same and further company plans to add a handsome number of SKUs every 5 years.

  • Structural Changes i.e., working in the different hybrid operating models.

  • Cost Transformation exercises done in International Markets including Egypt, Vietnam, and Bangladesh.

Foods Business:

  • As per the company, the penetration of Oats is still single-digit and hence there is a huge opportunity to drive the penetration of Oats.

  • The company has added 3 new categories to Oats Segment.

  • Also, the Honey segment has performed well in the quarter and has gained notable market share. This segment may also grow in double-digits.

The company will focus on the Chyawanprash category as well in the coming period.

Please find attached for Detailed Analysis.

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