MARICO - Marico Limited Share Price

Management's outlook for Marico Limited is optimistic, focusing on a gradual recovery in demand supported by moderating inflation, favorable government policies such as GST rationalization, and strong agricultural output. Key forward-looking points include:

1. Volume Growth: The India business is expected to maintain improved volume growth, driven by effective pricing strategies and robust market share gains. Management noted that more than 95% of the business sustained or gained market share, with the value-added hair oils segment reaching an all-time high value share of nearly 30%.

2. Parachute Oil Pricing: As copra prices have decreased by about 25%-30%, management plans to pass on benefits to consumers in the coming months, which could potentially support a recovery in volume growth.

3. Foods Segment: The company anticipates a return to double-digit growth in the organic food business over the next two quarters, bolstered by a strategic investment in 4700BC"”expected to triple its annual revenue run rate (ARR) to INR 420 crores within three years.

4. Digital-First Portfolio: The digital-first segment is on track to exceed an ARR of INR 1,000 crores by the end of FY '26, with aspirations for a 2.5x increase from FY '24 ARR next year.

5. International Growth: The international business is projected to sustain robust growth, particularly in Bangladesh, Vietnam, and MENA regions, exhibiting a virtuous growth cycle.

6. Operating Margins: With input cost pressures easing, management expects a progressive improvement in operating profit growth rates and plans to strive for a 150"“200 basis point increase in operating margin over the next few quarters.

Overall, management is focused on leveraging its strong fundamentals to drive sustainable growth while maintaining disciplined cost management and strategic investments for long-term profitability.

1. Question: "If you want to take it 3x in three years, could you talk about what all are needed apart from the brand support? In terms of distribution, for example, where is the company now? How much is coming from which kind of distribution channel? And where do you see the delta?"

   Answer: To achieve the 3x growth target for 4700BC, we need strategic investments in distribution. Currently, only 20%-25% comes from modern trade and online channels. We see significant potential in retail, focusing on premium distributions. With Marico's established e-commerce access, we plan to tap into modern trade more aggressively, allowing us to capture more retail market share, streamlining costs, and leveraging synergies with our existing brands.

2. Question: "From a pricing perspective, would you plan to have some kind of an offering that also appeals to the smaller box GT?"

   Answer: While the brand primarily operates in the premium segment, we understand the importance of appealing to varied consumer needs. We're focused on premiumization but will explore options that could cater to smaller formats, ensuring we capture a broader customer base without diluting our brand's essence or positioning.

3. Question: "What will be the expectation on profitability from a three-year perspective for 4700BC?"

   Answer: Initially, we're investing in growth, which might not yield immediate profits. However, we anticipate that with synergies from Marico's platform and strong consumer demand for gourmet snacks, we can achieve a path to profitability within three years, potentially reaching double-digit margins as the brand scales.

4. Question: "As a category in hair oil, how do you see the next year, especially considering the revival seen in the market?"

   Answer: We expect considerable growth in the hair oil sector, particularly VAHO, which has shown resilience with double-digit growth. The two-year CAGR ex of Shanti is 14%, driven by enhanced distribution and effective branding through initiatives like Project SETU, targeting market recovery and sustaining our share.

5. Question: "How should one think about the pricing in Parachute as you go down the quarter, especially with copra prices decreasing?"

   Answer: We have not acted on pricing yet due to our prior limited price increases relative to copra spikes. We're preparing for a single significant price adjustment when we have a clearer picture of copra pricing, ensuring healthy trade channel dynamics without causing market disruption.

6. Question: "What is the real competition in the gourmet snacking category at this point in time?"

   Answer: The gourmet snacking market is still expanding with significant opportunity. Our main competitors include niche popcorn brands and healthy snack options. There is ample room for growth, particularly in offering better-for-you alternatives, which aligns with consumer trends towards healthier eating.

7. Question: "With copra prices corrected significantly, what kind of margin expansion can we expect on an overall consolidated basis?"

   Answer: We are aiming for mid-teen growth in operating profit, with an expected margin expansion of 150 to 200 basis points. Although precise margin guidance is challenging, the reduction in input costs will contribute positively, enhancing our margins substantially as the pricing effects take hold.

8. Question: "When do you see a recovery in the growth rate starting to pick up again in the foods segment, considering the adjustments made?"

   Answer: We anticipate a return to strong growth within the next two quarters. Our focus on rationalizing our portfolio and redirecting investment into core products sets the stage for recovery, aiming for an ambitious 20%-25% growth trajectory when including both organic and inorganic contributions.