Marico Limited — Q3 FY25 earnings call

Call held 7 Feb 2025

Management summary

Marico delivered a strong Q3 FY25 with high teen revenue growth in India and double-digit constant currency growth internationally. The Foods and Digital first portfolios demonstrated significant scale-up, contributing to strategic diversification. Despite elevated input costs and currency headwinds, the company aims to maintain a 20% operating margin for the year, driven by proactive pricing actions and cost management.

Highlights

  • India business achieved a sequential uptick in underlying volume growth and robust high teen revenue growth, reaching a 13-quarter high.

  • Food business scaled to ₹1,000 crores ARR in Q3, with Saffola oats delivering double-digit growth.

  • Digital first portfolio reached ₹600 crores ARR in Q3, with Beardo on track for double-digit EBITDA margins.

  • International business sustained double-digit constant currency growth momentum, with strong performance in Bangladesh and MENA.

  • Strategic diversification into Foods and premium personal care (including Digital first brands) now accounts for 21% of domestic business in 9M FY25, with a combined ARR of ₹1,900 crores.

Concerns

  • Input inflation was higher than expected, putting transient pressure on profitability, especially from firm copra prices.

  • Currency headwinds had a 2% impact on consolidated EBITDA this quarter.

  • Shrinkflation in Parachute's price point packs led to a 1% volume impact, expected to continue for a couple of quarters.

  • GT channel experienced prolonged sluggishness, though initiatives are underway to revive it.

  • Southeast Asia business was muted due to a tepid consumption environment in Vietnam and geopolitical issues in Myanmar.

Key financials

3 periods

Headline

  • Food Business ARR
    ₹1,000 Cr
  • Digital First Portfolio ARR
    ₹600 Cr
  • Foods & Premium Personal Care Combined ARR
    ₹1,900 Cr
  • Consolidated EBITDA Currency Impact
    -2%

9M FY25

  • Foods & Premium Personal Care Share
    21%

FY25 Target

  • Overall Operating Margin
    20%

What they filed

Q1 FY27: revenue up 22.9%, net profit up 27.1% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue2,664 2,794 2,730 3,221 3,482 +31%3,537 +27%3,301 +21%3,957 +23%
EBITDA522 533 458 655 560 +7%592 +11%521 +14%819 +25%
Net profit433 406 345 513 432 −0%460 +13%408 +18%652 +27%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Guidance & targets

Volume

  • India business volume growth Volume · near and medium term · High confidence top quartile
    We remain committed to achieving top quartile volume growth in the India business and double-digit consolidated revenue growth in the near and medium term, as well as double digit constant currency growth in the international business.

    — Saugata Gupta, MD & CEO

Profitability

  • Digital business margin Profitability · next 3 to 5 years · Medium confidence merge with company margin
    And the digital will hit again double digits. Over the next 3 to 5 years the aim is to merge with the company margin.

    — Pawan Agrawal, CFO

  • Overall operating margin Profitability · for the year · High confidence about 20%
    we believe we should be able to hold about 20% operating margin for the year.

    — Pawan Agrawal, CFO

  • Foods plus digital portfolio gross margin Profitability · High confidence higher than company gross margin
    So, currently at a weighted average level, what Saugata mentioned is that we try and manage that the weighted average gross margin portfolio, the weighted average gross margin of the Foods plus digital portfolio has to be higher than the company gross margin.

    — Pawan Agrawal, CFO

Revenue

  • Plix ARR Revenue · very soon · Medium confidence 500 crores
    We are extremely confident that Plix will hit a 500 crores number very soon.

    — Saugata Gupta, MD & CEO

Business Mix

  • Foods dominance over Saffola Business Mix · 2-3 years · Medium confidence dominate Saffola
    So, if I look at it in another 2-3 years it will be 50-50 and then Foods will dominate Saffola.

    — Saugata Gupta, MD & CEO

Channel Growth

  • OT vs GT growth Channel Growth · next 3-4 years · High confidence OT higher than GT
    I think if you ask me, over the next 3-4 years, obviously OT is going to grow higher than GT.

    — Saugata Gupta, MD & CEO

  • GT growth Channel Growth · Medium confidence marginally improve
    Hence, I would say that in GT, we are expecting growth to marginally improve.

    — Saugata Gupta, MD & CEO

  • Digital brands in GT Channel Growth · next two years · Medium confidence reasonable amount of growth
    However, as mentioned earlier, we do not intend to be overly ambitious in this segment. We believe that success requires doubling down and specializing in one or two key channels.

    — Saugata Gupta, MD & CEO

Portfolio Strategy

  • VAHO portfolio transition outcome Portfolio Strategy · By FY25-26 · High confidence higher value growth, increased value share, and a continued focus on long-term growth
    Now that reset takes time, but By FY25-26, we expect this transition to result in higher value growth, increased value share, and a continued focus on long-term growth.

    — Saugata Gupta, MD & CEO

  • VAHO bottom of pyramid share Portfolio Strategy · High confidence bring down share much more rapidly
    Yes, but what we want to do is we want to bring down the share much more rapidly.

    — Saugata Gupta, MD & CEO

Market context

  • Digital first portfolio EBITDA margin Profitability · by FY27 · High confidence double digit
    We maintain our aspirations to achieve double digit EBITDA margin in the Digital first portfolio by FY27.

    — Saugata Gupta, MD & CEO

  • International business constant currency growth Revenue · medium term · High confidence double digit
    We are confident of maintaining the strong double digit constant currency growth trajectory in international markets and gradually unlocking the margin upside to scale benefits in the medium term.

    — Saugata Gupta, MD & CEO

  • Consolidated revenue growth Revenue · full year · High confidence double digit
    We are on track to achieve double digit consolidated revenue growth for the full year.

    — Saugata Gupta, MD & CEO

  • Beardo EBITDA growth Profitability · High confidence double digit
    In fact, Beardo is likely to deliver double digit EBITDA growth.

    — Pawan Agrawal, CFO

  • Total digital business EBITDA margin Profitability · next year · High confidence positive
    And next year as a total digital business as a cohort we definitely believe that we'll move to positive EBITDA margin.

    — Pawan Agrawal, CFO

  • Total digital business EBITDA margin Profitability · FY27 · High confidence double digit
    And in FY27 we would strive for delivering double digit EBITDA margins.

    — Pawan Agrawal, CFO

  • Revenue and Profit growth Revenue & Profit · FY26 · High confidence double digit
    But we are definitely committed for double digit revenue growth which will have a good volume growth and a healthy profit growth.

    — Pawan Agrawal, CFO

  • Bangladesh constant currency growth Revenue · this year and next year · High confidence double-digit
    But the way to look at it is that we should be hitting a double-digit constant currency growth. This year also and next year also will aspire to deliver a double-digit constant currency growth.

    — Saugata Gupta, MD & CEO

What to watch in Q4 FY25

Copra price trends

early Q1 FY26
Current Firm in near term
Target Cooling down from early Q1 FY26

Why it matters

Copra prices are a key input cost, and their moderation is expected to ease margin pressure and allow for volume-protective pricing.

Prices are expected to cool down once the flush season resumes from early Q1'FY26.

Risks & concerns

  • Input cost inflation (copra, veg oils)

    medium

    Input inflation was higher than expected, putting transient pressure on profitability; copra prices are forecast to remain firm in the near term.

    Management acknowledged

  • Shrinkflation volume impact

    medium

    A 1% volume impact due to shrinkflation in price point packs is expected to continue for a couple of quarters due to anniversarization.

    Management acknowledged

  • GT channel sluggishness

    medium

    The GT channel has seen prolonged sluggishness due to evolving inter-channel dynamics, conflict, and shifts in consumer behavior.

    Management acknowledged

  • Competition in VAHO (bottom of pyramid)

    medium

    Unreasonable competition in the bottom of the pyramid segment of Value Added Hair Oils (VAHO) is impacting performance.

    Management acknowledged

  • International market challenges (currency, consumption)

    medium

    Currency headwinds had a 2% impact on consolidated EBITDA, and Southeast Asia was muted due to tepid consumption in Vietnam and geopolitical issues in Myanmar.

    Management acknowledged

  • Subdued middle and bottom of pyramid segments

    low

    Middle and bottom of pyramid segments appeared relatively subdued by inflation and slow wage growth.

    Management acknowledged

Q&A highlights

8 direct
Plix & True Elements distribution, competitive intensity, and profitability Direct
Given a choice between 60% growth, and high cash burn, versus 25%-30% growth and having responsibility towards both capital utilization and managing profitable scale up, we have chosen the latter.

Management clarifies its strategy for D2C brands, prioritizing sustainable profitable growth over aggressive, high-burn growth, and focusing on differentiated portfolios for GT.

Asked by Abneesh Roy

Plix ₹500 crores target timeline and pricing strategy Direct
I think in terms of pricing at the end of the day in a nutraceutical product, we are quite okay. We don't want to deep discount it, because that finally dilutes the equity and leads to commoditization of the category.

Management indicates Plix will hit ₹500 crores ARR soon and explains its pricing strategy to maintain brand equity and healthy margins, even while prototyping lower MRP packs for GT.

Asked by Abneesh Roy

Parachute pricing, shrinkflation volume impact, and rural vs urban growth Direct
Yes, it will continue because anniversarization will only happen in Q2-Q3 because Q2-Q3 sometimes in Q2 and Q3 and so that will continue for a couple of quarters.

Management confirms the transient nature of shrinkflation's volume impact and provides context on rural growth outperforming urban for the FMCG sector.

Asked by Abneesh Roy

Impact of potential copra deflation on profitability and competition Direct
Now given the structural levers that we have pulled in the last couple of years where we have improved profitability on various fronts, here we'll be more proactive in terms of passing on the benefits to protect the volume and consumer franchise.

Management expresses confidence in managing copra price cycles proactively, indicating a shift towards passing on benefits to consumers to protect volume and franchise, while aiming for double-digit revenue and profit growth.

Asked by Abneesh Roy

Food business segment contribution and EBITDA margins Direct
I believe in scaling growth by focusing on 3-4 major categories rather than spreading efforts thin across 8 smaller ones. The moment we scale 3-4 things to ₹300-400 crores each, we will achieve our EBITDA targets.

Management outlines its strategy for the food business, focusing on scaling key categories to achieve profitability targets and clarifying that oats are the largest contributor.

Asked by Percy Panthaki

Digital business EBITDA margin trajectory Direct
It will be low single digit. In fact, Beardo is likely to deliver double digit EBITDA growth. And next year as a total digital business as a cohort we definitely believe that we'll move to positive EBITDA margin. And in FY27 we would strive for delivering double digit EBITDA margins.

Management provides clear targets for the digital business's profitability, indicating a path to positive EBITDA next year and double-digit EBITDA by FY27.

Asked by Avi Mehta

VAHO portfolio recovery and initiatives Direct
We don't believe in BTL driving growth. We believe in ASP driving growth because we believe brand equity drives growth and we are doing it independent of competitive action. And therefore, we have started investing behind mid and the premium part of the business.

Management explains its strategy for VAHO, focusing on brand equity and premium segments rather than BTL-driven growth in the competitive bottom of the pyramid.

Asked by Arnab Mitra

Channel growth dynamics, especially quick commerce Direct
I think quick commerce obviously is the biggest driver of growth and what we have realized that we need to have a differentiated portfolio in quick commerce and interestingly even some of the digital brands are also doing well in quick commerce.

Management highlights the significant growth in quick commerce (50%+) and its strategic importance, alongside continued double-digit growth in MT and e-commerce.

Asked by Kartik Chelappa

2 min read 6 chapters

Detailed narrative

Operating Environment and Demand Trends

The FMCG sector experienced reasonably steady demand in Q3 FY25. Retail and food inflation, while elevated, showed signs of easing in December. Urban demand remained stable but soft, whereas rural demand improved, growing at 2x urban on a year-on-year basis for the third consecutive quarter. HPC categories continued to outperform packaged food, supported by government schemes and a favorable crop season.

India Business Performance and Strategic Diversification

Marico's India business posted a sequential uptick in underlying volume growth and robust high teen revenue growth, marking a 13-quarter high. The Foods business scaled to ₹1,000 crores ARR in Q3, with Saffola oats achieving double-digit growth. The Digital first portfolio reached ₹600 crores ARR in Q3. Foods and premium personal care brands now constitute 21% of the domestic business in 9M FY25, with a combined ARR of ₹1,900 crores, demonstrating successful diversification.

International Business Resilience

The international business sustained its double-digit constant currency growth momentum despite a 2% impact on consolidated EBITDA from currency headwinds. Bangladesh delivered robust growth, and MENA markets (Gulf and Egypt) showed strong growth and market share gains. However, Southeast Asia was muted due to a tepid consumption environment in Vietnam and geopolitical issues in Myanmar.

Margin Management and Input Cost Outlook

Despite higher-than-expected input inflation, particularly firm copra prices, Marico implemented price hikes towards the end of Q3. Management expects copra prices to cool down from early Q1 FY26. The company aims to hold an overall operating margin of about 20% for the year, leveraging pricing power and cost management initiatives.

Channel Strategy and Digital Growth

Alternate channels continue to drive growth, with quick commerce growing over 50% and modern trade/e-commerce in double digits. The GT channel experienced sluggishness, but Project SETU (now in 11 states) and a focus on differentiated portfolios are expected to revive its growth. The digital first portfolio is moving towards positive EBITDA next year, targeting double-digit EBITDA by FY27.

VAHO Portfolio Reset

The Value Added Hair Oils (VAHO) portfolio is undergoing a reset, shifting focus towards mid and premium segments and away from intense competition in the bottom of the pyramid. This transition, expected to yield results by FY25-26, aims for higher value growth and increased value share, supported by investments in brand equity rather than BTL activities.

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