Marico Q2 Results Review - Expect Better Volume In H2; Sharp Price Cuts To Weigh On Sales Growth: Nirmal Bang

Nirmal Bang Report

Marico Ltd.’s consolidated Q2 FY23 results were largely in-line with the pre-quarterly qualitative commentary. Marico’s domestic business (~76% of H1 FY23 topline) saw 3% YoY volume growth (three-year compound annual growth rate ~7%). Volume growth in Q2 FY23 was largely pulled down by:

1. Parachute coconut oil, which was affected by an extended sluggishness in ‘loose to branded’ conversion in coconut oil and multiple price drops impacting trade sentiments in Q2 FY23,

2. added hair oils growth was subdued due to continued headwinds in rural consumption and pack size reductions (which resulted in 1% impact on domestic volume).

On the other hand, Marico's international business maintained its strong momentum, with 11% YoY constant currency growth despite global macro-economic and geo-political uncertainties.

Price cuts, consumption of relatively higher cost inventory and sharp currency depreciation affected profitability in Q2 FY23 even as key inputs trended lower.

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