PL First Cut - Marico 2Q24

PL First Cut – Marico 2Q24 – Amnish Aggarwal – Head of Research, Prabhudas Lilladher Pvt Ltd

Marico 2Q24 – Numbers in-line, volumes impacted amid subdued demand

(CMP: Rs532|Hold)

Financial highlights

• Revenues declined by -0.8% YoY to Rs24.8bn (PLe: Rs24.9bn)
• Volume Growth: Parachute up 1% (PLe: 2.5%)
• Gross margins expanded by 685bps YoY to 50.5%
• EBITDA grew by 14.8% YoY to Rs5bn (PLe:Rs 4.9bn); Margins expanded by 272bps YoY to 20.1% (PLe:20.0%)
• A&P Spends expanded by 229bps YoY to 10.8%
• Adj PAT grew by 17.3% YoY to Rs3.6bn (PLe: Rs3.5bn)
• Declared interim dividend of Rs3/share.

Other Updates

• Value added hair oil grew by 1% YoY led by slower recovery in mass personal care.
• Saffola franchise declined by 12% YoY led by price cuts taken over past 12 months.
• Food continue to perform well with revenue growth of 25% YoY.
• Premium personal care continues to deliver healthy growth.
• Copra prices are up 1% sequentially. However, declined by 2% YoY

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Parachute saw 1% volume growth which was impacted by subdued consumer sentiments, however the franchise gained 35bps market share during Q2. Higher food inflation and uneven rainfall have led to slower than expected recovery of rural markets, although packaged food given its high urban salience has performed well. GM have improved and are further expected to improve given softening of input prices. We believe that with stable inflation, upcoming festive season & price cut implemented across category will lead to gradual recovery in volumes of rural market. We have a Hold rating on the stock

Stock trades at 40.6x FY25 EPS