Marico Ltd (BOM:531642) Q4 2025 Earnings Call Highlights: Strong Revenue Growth Amidst Margin ...

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Revenue Growth: Achieved double-digit consolidated revenue growth for FY25.
Parachute Revenue Growth: Revenue growth in the 20s, aided by pricing.
Food Segment Growth: 44% year-over-year growth in Q4 and 30% growth in FY25, surpassing INR 900 crore in annual revenues.
Premium Personal Care ARR: Exited FY25 at INR 750 crore ARR.
International Business Growth: Sustained double-digit constant currency growth in Q4 FY25.
Operating Margin: Consolidated operating margin for FY25 ended just shy of 20%.
A&P Spend Increase: A&P spends up 35% in Q4 and 18% for the full year FY25.
Digital First Portfolio ARR: Expected to be 2.5 times of FY24 ARR in FY27.
EBITDA Margin: BRW reached near double-digit EBITDA margin.
India Business Revenue Share: Foods and premium personal care at 22% in FY25, with a combined ARR of nearly INR 2,000 crores.

Warning! GuruFocus has detected 6 Warning Sign with BOM:531642.

Release Date: May 02, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Marico Ltd (BOM:531642) achieved double-digit consolidated revenue growth for FY25, supported by improving volume growth in India and broad-based growth in international markets.
The company reported robust value growth of 44% year-over-year in Q4 for its food segment, surpassing the INR 900 crore mark in annual revenues.
Premium Personal Care sustained strong momentum, with the digital-first portfolio exiting FY25 at a INR 750 crore ARR, exceeding expectations.
International business maintained double-digit constant currency growth, with Bangladesh and MENA regions showing resilience and consistent performance.
Marico Ltd (BOM:531642) has significantly improved the profitability of its foods and premium personal care portfolios, contributing to a more resilient revenue mix.

Negative Points

Margins were under pressure due to input cost inflation, particularly in copra prices, which are expected to remain high in the short term.
Parachute had a muted quarter due to consumption titration during hyperinflationary cycles, with only low single-digit volume growth.
General trade remains sluggish, and efforts are being made to revive it through Project SETU, indicating challenges in traditional distribution channels.
The company faces competitive pressures in the coconut oil segment, with smaller players and branded competition impacting market dynamics.
Volume growth in the Saffola edible oil segment is impacted by sharp price hikes, with expectations of steady volumes contingent on stable vegetable oil prices.

Q & A Highlights

Q: On copra prices and gross margins, how should one think about the future outlook given the recent price increases in Parachute? A: Pawan Agrawal - Chief Financial Officer: Gross margins will remain under pressure for the next quarter due to high copra prices, but we expect some softening by the end of Q1. Our dependence on copra for profitability has decreased due to diversification into other segments, and we anticipate margin pressure to ease by Q2.

Q: Regarding the strong growth in the Foods segment, can this growth rate be sustained, and are there new subcategories being considered? A: Saugata Gupta - Chief Executive Officer: We see significant growth potential in Foods, especially as we expand distribution in general trade (GT) and leverage quick commerce. We are confident in sustaining a 25% CAGR, with plans to scale current categories like oats and honey, and explore new categories.

Q: What is the expectation for driving double-digit value growth in FY26 in India, considering recent oil price corrections? A: Pawan Agrawal - Chief Financial Officer: Growth is expected from core business volume improvements, continued 25%+ growth in Foods, and high growth in digital-first businesses. We anticipate more than 5% volume growth, with 6-7% as a base case.

Q: How is the competitive environment in the Parachute and VAHO segments, and what are the impacts of recent price increases? A: Saugata Gupta - Chief Executive Officer: In coconut oil, smaller players face challenges due to high copra costs, leading to reduced competition. Organized competitors have also increased prices, which benefits us. We expect Parachute volumes to recover as inflation stabilizes.

Q: Can you discuss the impact of Project SETU on distribution and market share, particularly for VAHO? A: Saugata Gupta - Chief Executive Officer: Project SETU aims to improve direct distribution quality, especially in rural areas, enhancing market share and diversification. It will help in both strong markets like the South and under-indexed markets like the North, benefiting VAHO and Parachute.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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