Marico Ltd (MARICO) Q2FY27 Concall Transcript - Sep-2026 Qtr
Moderator: Good evening ladies and gentlemen. You are connected to the Marico Limited earnings conference call. Please stay connected, this conference is expected to begin in the next 2 minutes. We thank you for your patience. Participants, you are connected to the Marico Limited earnings conference call. Please stay connected, this conference will begin shortly. We thank you for your patience.
Moderator: Ladies and gentlemen, good day and welcome to Marico Limited's Q2 FY '27 earnings conference call. We have with us the senior management of Marico represented by Mr. Saugata Gupta, MD and CEO, and Mr. Pawan Agrawal, Group CFO and CEO, International Business. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference, please signal an operator by pressing star then zero on your touch-tone phone. Please note
Moderator: This conference is being recorded. Before we get started, I would like to remind you that the Q&A session is for institutional investors and analysts, and therefore, if there's anybody else who is not an institutional investor or analyst, but would like to ask questions, please directly reach out to Marico's Investor Relations team. I now hand the conference over to Mr. Saugata Gupta. Thank you, and over to you, sir.
Saugata Gupta (Marico Ltd): Yeah. Hi. Good evening, everyone, and thank you for joining the call. I'll start with a perspective on the operating environment during the quarter and we'll then cover our performance followed by our outlook and strategic priorities. The global operating environment remained volatile during the quarter, geopolitical developments in West Asia led to higher energy prices and renewed concerns around supply chain and inflation. In India, however, the economic activity remained resilient supported by domestic consumption and investment. Consumer inflation increased led by food, edible oil and fuel. These developments reinforced the importance of managing agility in pricing, sourcing and execution. Against this backdrop, we delivered yet another quarter of strong all-round performance. Consolidated revenue grew 13%, driven by 10% volume growth in India business and 13% constant currency growth in international business. EBITDA grew 27%, while PAT increased 31%, marking the highest profit growth in the last 50 quarters. Gross margin expanded by approximately 600 basis points year-on-year. This improvement was driven by favorable product port- portfolio mix, improving profitability across our new growth engines and the benefit of softer copra prices. Advertising and promotion expenditure increased by 44% during the quarter as we continue to invest in strengthening the long-term equity of our core franchise while accelerating the scale up of our new growth engines. Even as we significantly stepped up our A&P investments, EBITDA margin expanded by 200 basis points to 18.2%. Our performance stands out even on a 2-year basis with revenue growth and EBITDA compounded at 22% and 17% respectively, underpinned by 8% volume growth in India business and 16% constant currency growth in the international business. This strong performance demonstrates how Marico has evolved over the last few years. We have built a more diversified portfolio with multiple increasingly complementary growth engines. Our core franchises, foods, and premium personal care, and digital-first brands, and a geographically diverse steady international business. This diversification has increased the resilience of our business across multiple commodity cycles. Last year, when copra prices reached multi-year high, we delivered resilient earnings growth and stable volumes in Parachute. This year, even after passing on the benefit of soap- softer copra prices to consumer, we have sustained strong top-line growth led by double-digit volume growth in India and an unprecedented volume growth in Parachute post a significant price drop. The consistency of our performance reflects something fundamental of Mar- about Marico, the willingness to challenge the status quo, the courage to set bold ambitions independent of external issues, and a deep sense of ownership to deliver on what we promise. That combination of strategic clarity, execution excellence in adversity and accountability to out- outcomes is what continues to raise the bar on our performance, and the numbers bear this out. Over the last 10 quarters, India has delivered high single-digit or better volume growth in 7 quarters, the international business has delivered teens or high constant currency growth in 9, while consolidated revenue growth has grown in the teens or higher in 8 of the last 10 quarters. Pivot to the strong perform- is our GTM transformation under Project SETU, which has given us significant advantage in terms of better reach, assortment, rural distribution and sharpened our execution. Our direct reach has gone up by more than 1.5x, while we have deepened our rural distribution by nearly doubling the number of stockists. We estimate that with SETU, we have been able to drive 1% to 2% incremental volume growth in the business over the last couple of years, with VAHO being the key portfolio that benefiting from this and now PCNO getting some benefits. In addition, SETU has delivered a far better rhythm of business every day of the month with significant savings in below-the-line spends and a very thin stock pipeline. We are now embarking upon SETU 2.0 in India, with a focus on AI and tech-led smarter growth and GTM expansion of our premium core and digital brands. Let me touch upon the key trends across the domestic business. Parachute Rigids delivered volume growth of 13%, it's highest in 22 quarters. The franchise gained around 570 basis points of volume market share and reached a new high of 60%. Importantly, Parachute
Saugata Gupta (Marico Ltd): positive value growth, despite a deflationary pricing environment. This performance reflects the formidable equity of the brand, the trust consumer placed in it, places in it, and the competitive advantage provided by our sourcing and supply chain capabilities. Value-added hair oils delivered its sixth consecutive quarter of stellar growth with a 21% value growth and an 80 basis point gain in value market share on a MAT basis. This consistency points to a structural shift in the portfolio as growth strategy. It is driven by our strategic pivots towards the mid and premium segments. This segment is both growth and margin accretive for us and delivered mid-teens volume growth in this quarter. Our almond hair oil franchise accelerated further. We remain on track to scale it to an annualized revenue run rate of over 100 crores by FY '28 with a medium-term aspiration of being a scale challenger by building it into a 200 to 250 crore ARR franchise by FY '30. In Saffola edible oil, we're undertaking a deliberate reset to strengthen the long-term profitability of the franchise. We rationalize the supply of select low-margin variants, which led to a high single-digit volume decline while revenue grew 6%. This process will get completed over the next two or three quarters. At the same time, our premium portfolio led by cold-pressed oil and Saffola Total continued to grow significantly ahead of the overall franchise. Beyond our core, a diversification agenda keeps gaining scale foods grew 45% and crossed an annualized revenue run rate of 1,500 crore, a significant jump from the last quarter. Saffola Foods delivered early teens growth led by oats, muesli, and soya chunks. Saffola Oats retained its position as India's number one oats brand. True Elements, 4700BC, and Cosmix are scaling up in line with our plans, with both accelerating sequentially. We are expanding these brands into relevant adjacencies and addressing a wider set of consumer needs and consumption occasions. At the same time, we're generating synergies across our food platform in order to drive margin improvement in their overall franchise. Premium personal care delivered a strong performance led by Livon serums and Parachute Advansed coconut shampoo, the portfolio comprising premium hair nourishment, hair cleansing, male grooming, and skincare has crossed an annualized revenue run rate of 500 crores. We are witnessing very good traction in shampoos and confident of achieving 100 crore plus this ARR this year with an exit with an aspiration to build into a 400-500 crore ARR portfolio in the medium term. Interestingly, shampoo as a category, globally across different brands, is beginning to contribute nearly 4% to 5% of our total turnover. Talking about digital-first personal care, we had identified quite early that this will be a key growth driver, and had accordingly pivoted towards covering this white space and building digital capabilities. Over the years, our digital-first personal care portfolio has grown grown to about 1,150 crores, and we have built some serious, holistic internal capabilities to scale up digital brands profitably. Beardo perfectly exemplifies this. Since we took over the brand under Marico's leadership in 2020, the business has scaled by more than 6x and is expected to cross 400 crores this year. At the same time, the profitability has improved by 1,900 bps. Our recent integration experience with True Elements has also been very good. This is indeed a strong proof of our ability to deliver sustained and profitable growth across the digital brands we fully acquire and scale up. Shifting gears to international business, we continue to see robust growth momentum with 13% constant currency growth and 23% growth in INR terms. Bangladesh delivered a 5% constant currency growth, a sequential improvement despite continued demand softness amidst persistent inflation and broader macroeconomic challenges. Business continues to grow competitively on a high base, compounding 13% on a 2-year basis and strengthening its market positions through sustained market share gains in the core portfolio, along with robust growth in shampoo. We expect the business to see a gradual improvement in growth in the subsequent quarters, driven by focused consumer activations and GTM transformation as we leverage our Project Setu playbook globally. Vietnam delivered another outstanding quarter with 22% constant currency growth led by strong performance across the portfolio and a sustained acceleration in e-commerce. Project Setu was rolled out in Vietnam during last year and is already delivering encouraging results through direct reach expansion, sharper in-store execution, and AI-led selling, building a strong platform for sustainable long-term growth. MENA grew 15% in constant currency terms, despite inflationary pressures and operational challenges. The business delivered a resilient performance, driven by strong execution, focused innovation,
Saugata Gupta (Marico Ltd): revenues EBITDA and PAT increasing by 18% 26% and 28% respectively. Importantly, all growth engines including India core, Foods, Premium Personal Care, Digital-first and International Business contributed to stellar performance. We enter the second half with high confidence and a strong momentum that positions us well to sustain the robust growth trajectory as we navigate the geopolitical challenges with disciplined execution. We are improving our annual outlook across key parameters. We expect to deliver teens revenue growth this year and comfortably cross the 15,000 crore revenue mark. We are confident to deliver mid-20s EBITDA growth, up from around 20% that we had estimated earlier, as we now have better visibility of the full-year picture. India business volume growth is also expected to touch double digits for the full year. On the cost front, copra prices have stayed range-bound at around 35% below last year's peak. Crude link derivatives and vegetable oils however have risen further on the back of geopolitical developments and weather related concerns. We are well equipped to manage these pressures. We will draw on the pricing power of the brands and have distinct advantage in the form form of softer copra prices and aggressive cost management program to help cushion crude-linked inflation. A repeatable business model and way of working is what powers our growth flywheel. Strong brands, wider reach and better assortment drive volume and favorable portfolio mix leading to improve profitability, giving us the headroom to reinvest in our brands, people, and capabilities, which in turn fuels the next round of growth. We have chosen to keep investing through cycles and that consistency is not visible in our results. The quality of execution and coping with adversity has become a key differentiating factor for us and it is what keeps the virtuous flywheels chugging along. This is further supported by the longevity and stability of our leadership. We are fully aware that the biggest enemy that stalls a virtuous cycle of growth is management complacency, overconfidence, and arrogance, and therefore, we are mindful of being hungry, humble, and paranoid every day. As we progress towards our stated vision to reach 20,000 crore by FY13 FY30 with mid-teens EBITDA CAGR, we feel more confident about our strategy, our capabilities, and the strength of our brands and people. With our current momentum, we aspire to wrap up our 20k target by 2029. After all, 'Yeh Dil Maange More'. This will mean that we will be doubling from 10k to 20k in 4 years without any major inorganic component, which will be unprecedented in the sector. We remain committed to growing profitably with sharper portfolio choices and disciplined capital allocation. Underpinning all of this is an empowered organization, built on depth of top talent across functions and specifically P&L leaders or general managers, AI-led capabilities and strong execution discipline. Today we have a portfolio that is insulated from the impact of a single category or of a single commodity cycle and multiple growth engines that strengthen one another. We have built deep capabilities in brand building, PAM expansion, digital marketing, GTM transformation, cost management, etc., and we have shown that we can deploy them at scale across our three businesses. The strong performance over the last several quarters is an outcome of the choices we made and stayed committed to. With the strategy, the momentum, and the organization in place, we are determined to compound this performance and deliver consistent profitable growth in the medium term. With this, I close my remarks and we can take questions.
Moderator: Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to please use handsets when asking a question. Ladies and gentlemen, we will now wait for a moment while the question queue assembles. Our first question comes from the line of Abneesh Roy with Nuvama. Please go ahead.
Abneesh Roy (Nuvama): Yeah. Thanks and congrats on the numbers and EBITDA upgrade. I wanted to understand the EBITDA upgrade. So if I see Copra is fairly stable last 4, 5 months and your non-coconut portfolio in fact sees more inflation versus 3, 6 months back, either in terms of Foods, Personal Care, or even Edible Oil. So, what has led to the upgrade? Is it because operating leverage kicks in a bit more stronger, given overall pricing environment is strong? Or is it that the growth portfolio either is doing better than expectation, I think which you mentioned, or because the funding needs for the growth business are a bit lower, or the Saffola edible oil, because you said some of the lower margin segments you're calling down and more focus on the premium end, is that a bigger reason for the upgrade? That's the first question.
Saugata Gupta (Marico Ltd): So, I think it's a combi
Saugata Gupta (Marico Ltd): combination of four, five things. Obviously a favorable mix where we are consistently ensuring that we keep on chopping things which are not profitable in the long term. Secondly, I think we now have a fair idea about the you know how the year will go. And as you know that as a procurement, we believe procurement is and position holding is a source of competitive advantage. So, therefore the consumption cost and the market prices are different depending on how your procurement efficiency is. Secondly, as you know that the Parachute growth has been and now is normal. I think when we started the year we are not sure about Parachute volume growth during a deflationary cycle. Although, in terms of we have now in terms of taken only one pricing, we have a very thin pipeline. You know, so therefore, we have managed it, I think, very, very well this time. Obviously, there are improvements in profitability of the diversification part of the business. And lastly, I think obviously what has happened is even in value-added hair oils, if you notice, the premium and the mid segments are growing further. So, and of course, we have a very able cost management program. So, I think we now have a fair fairer visibility than what we had one quarter ago to call this out.
Abneesh Roy (Nuvama): Sure. My second question has two parts. First is protein segment in India is doing really well. If we see Milky Mist numbers there is a 40% growth consistently. You also do have the Soya Chunks business where you have done quite well. So, if you can discuss ARR for Soya Chunks, what kind of market share in modern trade and e-commerce it has and what will be the 2030 aim in this part of the portfolio? Second is are you looking at value-added protein? Because ultimately, protein value-added sells at a much higher pricing and margin. For example, something like tofu, which will be a processed product of soya, but obviously that requires cold chain and lot of different elements. So, what's your thought on participating in the value-added protein? Second quick question on shampoo anything in Kirana you have managed to take and what is the what is the success you are seeing, what is the reason for the success? Is it just the brand extension which is working or something different? Because 5% of your salience international comes from shampoo. So, something from there is is able to plug the gap here or is it just the brand extension and your normal very focused market share gaining a new category that is helping if you can elaborate on that?
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